The Epistemic Crisis in Macroeconomics

Epistemology is defined as the investigation of the origin, nature, methods, and limits of human knowledge. In 2018, Jonathan Rauch wrote about epistemology in the context of current events in National Affairs. “The Constitution of Knowledge” argues that societies of … 
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Fama, Shiller, and Eula Biss

A friend argues that I need to try harder to understand the how otherwise reasonable non-economists make sense out of fundamental economic concepts like capitalism, free markets, and business cycles. He recommended a recent book, Having and Being Had by … 
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Helping a Great Idea: Michael Jensen’s Residual Rent

Residual rent, particularly when used in explaining income distribution in highly specialized economies, is a great, albeit unappreciated, idea in economic theory. Consider two facts. First, useful macroeconomics require evidence-consistent modeling of factor-income shares. Second, such modeling is inconsistent with … 
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Helping a Reluctant Theorist: Joe Stiglitz

Substantial Harm

Efficiency-wage theory (EWT) was our best hope for microfounding meaningful wage rigidity (MWR) before New Keynesians (NK) abandoned that line of research as too difficult. The abandonment was facilitated by the damage caused by Joe Stiglitz’s market-centric version of … 
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A Reprise of the GEM Pandemic Model

This post takes another look at the GEM contribution to understanding the sort of macro instability produced by COVID-19 pandemic. Some months ago, this blog summarized the newly constructed model. This reiteration has two parts. First is a brief summary … 
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