An Exortation

 Exchange generalization has enabled construction, long overdue, of the first evidence-consistent rational-behavior theory of wage determination in more than a hundred years, finally moving our understanding of employee pay out of the 19th century. While having a useful explanation of … 
Read More | Comment

An Insight from Robert Lucas

 

This Blog has been hard on Robert Lucas, the famous University of Chicago economist and leader of the anti-Keynesians in the late 20th century macro wars. His success in making market-centric general-equilibrium modeling a faith-based choice justifies censure. Policy-relevant macro … 
Read More | Comment

Core of Usable Macroeconomics

Three principles.  The GEM Project identifies three principles that constitute the core of usable macro theory in highly specialized economies. The compact set supports stabilization and growth policymaking while still being fully microfounded by rational transactions organized by dynamic general … 
Read More | Comment

Neil Irwin’s Shame, Part IV

As argued in earlier posts, Neil Irwin’s shame is rooted in the know-nothing approach that has long been one of Irwin’s hobby horses. He appears to derive satisfaction in reporting on mainstream economists’ struggling with some contemporaneous problem that he … 
Read More | Comment

Neil Irwin’s Shame, Part III

 

 

This post is the third installment bashing Neil Irwin’s hobby-horse that the economy is too complicated for human comprehension. He has been mounting his soapbox and arguing that economists are fooling themselves and trying to fool everybody else. In so … 
Read More | Comment

Neil Irwin’s Know-Nothing Approach Part II

The thesis that runs through the GEM Project is that macroeconomics, consistent with the neoclassical tenets of optimization and equilibrium, can powerfully explain instability if rational price-mediated exchange is extended from the marketplace to information-challenged workplaces. In that context, Neil … 
Read More | Comment

Is Stagflation Coming?

Is stagflation coming? No. (So much for on the one hand or the other.) The next macro crisis facing the country will be something else, as yet unknown. But we know today that the available evidence doesn’t come close to … 
Read More | Comment

Two Models of Stagflation

 

Mainstream FGME Analysis

Eugene Farmer (2010b, p.60) usefully summarized the durable mainstream friction-augmented general-market-equilibrium (FGME) explanation of the stagnation decade: “During the 1970s, the U.S. economy experienced high inflation and high unemployment at the same time and the data did … 
Read More | Comment

Stagflation Facts: A Primer

From the New York Times (October 13, 2021): “Wall Street is chattering about the chances of a return of an economic specter from the 1970s: the toxic mix of sluggish economic growth and high inflation that came to be known … 
Read More | Comment