Lewis Two-Sector Growth Model

This post, second in a five-part series on GEM contributions to growth theory, features Sir Arthur Lewis’s celebrated two-sector model that turns out to be a comfortable fit with the Project’s marketplace-workplace general-equilibrium macroeconomics. Once endowed with generalized-exchange microfoundations, Sir … 
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Contributing to Growth Theory

 

The most recurring theme of the GEM Blog has two parts. First, mainstream macroeconomics, rooted in market-centric general equilibrium and therefore unable to accommodate meaningful wage rigidity, cannot be stabilization-relevant. Second, the generalization of rational exchange from the marketplace to … 
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The Curse of Market-Centricity

The GEM Blog’s basic argument with mainstream macroeconomists concerns their market-centricity. The  case is multidimensional but, at its core, is rooted in three facts. First, if rational-behavior macro theory cannot accommodate involuntary job loss (IJL), it cannot be stabilization-relevant. Forced … 
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Thinking about Socialism

The University of Chicago’s GenForward Project recently polled Americans aged 18 to 34 and found that 49 percent hold a favorable opinion of capitalism and 45 percent favorably view socialism. Among Democrats, 61 percent have a positive opinion of socialism … 
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Kenneth Arrow and What’s Important

In my considered opinion (with apologies to my MIT colleague Paul Samuelson), Ken Arrow (1921-2017) was the most accomplished economic theorist of the second half of the 20th century. I am especially impressed that he tackled only really important problems. … 
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Settled Macro Theory? More evidence.

We must not forget that, in the Great Recession, prominent central bankers rejected modern macro theory as useless. That was, of course, when useful theory was most needed. Stabilization authorities complained that consensus modeling failed to provide practical guidelines for … 
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Welcome Back Ben, Tim, and Hank

The reemergence of Ben Bernanke, Timothy Geithner, and Henry Paulson (BGP) on the policymaking scene stimulated this post. Their book, Firefighting: The Financial Crisis and Its Lessons (2019), was preceded by a succinct New York Times op. ed., “What We Need … 
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