Modeling Management: Evolution of the Science

The generalized-exchange model’s large-establishment venue (LEV) provides an important role for the active management of labor. Most notably, human-resource departments, universally present in complex, highly specialized firms, are tasked to calibrate firms’ modal workplace-exchange relations. (See last week’s post.) GEM … 
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Modeling Management: Setting the Stage

The marketplace-workplace synthesis featured in this Blog addresses a lot of debilitating gaps in dominant NK macro theory. Among the most notable, the two-sector approach provides a much more robust role for optimizing management. Mainstream modeling relies on market exchange … 
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More on Woodford’s Macro-Theory Convergence

Last week’s post summarized Michael Woodford’s five key elements of the 21st-century consensus among macro theorists. He celebrates the general acceptance of the friction-augmented general-market-equilibrium (FGME) framework in modern analysis: “… the study of business fluctuations is no longer driven … 
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Shaky New Keynesian Foundations

Michael Woodford has long been a leader in rooting New Keynesian (NK) macroeconomics in friction-augmented general-market-equilibrium theory. In late 2008, when his market-centric thinking was being fundamentally challenged by events, Woodford participated in a symposium entitled “Convergence in Macroeconomics’’. With … 
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Preventing a Pandemic Depression

More than a decade ago, GEM Project economists constructed an extreme-instability model that demonstrated how monetary authorities prevented the 2008-09 financial crisis from morphing into a 21st-century depression. Today, that model has another important story to tell. This time it … 
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Third Venue of Rational Exchange, Part II

The most intrepid economic analysis of government behavior has come from public-choice theorists. Particularly interesting is that they play by formal rules of rational exchange (anchored by continuous equilibrium) in their modeling of the public venue. Public-choice theory is closely … 
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Third Venue of Rational Exchange, Part I

GEM macro modeling, focusing on rational exchange in both the marketplace and information-challenged workplaces, is obviously incomplete. Thorough analysis of highly specialized economies needs a third venue, in which exchange is arranged and implemented by government and is atypically price … 
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Labor Supply Elasticity and Pure Wage Rent

A favorite pastime of mine is browsing through macro textbooks, identifying familiar topics that are badly explained by mainstream friction-enhanced general-market-equilibrium (FGME) theory. In particular, I am looking for phenomena that cannot be adequately understood absent the generalization of rational … 
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