It is testimony to the determined Ptolemaic defense of mainstream market-centric, general-equilibrium macro theory that publication of research on the existence and nature of meaningful wage rigidity (MWR), defined by its capacity to rationally suppress wage recontracting, has disappeared. The …
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The Blame Game
Washington, Wall Street, and – most importantly – Hollywood agree that the 2007-09 Great Recession was caused by excessive lending to unreliable low-income home buyers. It was an open secret that subprime applications frequently inflated borrower incomes, causing financial seers …
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Stagflation and the Fed’s Inflation Objective
The decade-long stagflation crisis that began in the early 1970s was a very difficult time. Its economic loss was, in the 20th century, second only to the 1930s Great Depression. Stagflation refers to high product-price inflation occurring simultaneously with high …
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Three Policymaking Lessons
The GEM Project reconstructs macroeconomic theory to be simultaneously micro-coherent and stabilization-relevant. It is a powerful guide to policymaking capable of containing welfare losses that periodically result from the demand propagation of macro shocks. In this post, generalized-exchange analysis identifies …
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Stabilization Policy, Part IV
This post concludes the GEM Blog’s four-part overview of the public policy on how to prevent future Great Recessions. The consensus quickly emerged in the aftermath of the 2008-09 extreme instability. First, the three pillars of Washington’s curious thinking on …
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Stabilization Policy, Part III
This post continues examining the stabilization policy that emerged in the aftermath of the Great Recession. It provides more detail on some of the mistakes made in pursuit of a flawed strategy.
First pillar mistake. Dodd-Frank’s prohibition of injections of public …
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Stabilization Policy, Part II
As promised last week, this post provides a thumbnail description of the GEM Project’s explanation of extreme instability. Such instability is defined as contractions in total nominal spending that are too powerful to be reversed by automatic fiscal stabilizers and …
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Stabilization Policy, Part I
The greatest damage done by the Ptolemaic intent of mainstream macro theorists is providing support for ill-conceived stabilization policymaking. Exhibit A is the manifestly wrong policy consensus on how to prevent future Great Recessions that emerged after the 2008-09 crisis. …
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Summarizing the Generalized-Exchange Theory
Two venues. Building on fundamental heterogeneities that feature information asymmetries and routinized jobs, rational workplace exchange in both the large- and small-establishment venues has been derived from axiomatic preferences and technology. Each demonstrates distinct decision rules, constraints, and mechanisms of …
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Culling the Canon
It is time to wrap up, for now, the GEM Blog’s forceful argument that the development and dissemination of consensus macroeconomics has been greatly damaged by Ptolemaic intent. To reiterate, research is Ptolemaic if its central objective is the defense …
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