Two Big Lies

A Big Lie uses vigorous, confident repetition to promote a false argument. This post looks at two big lies, both originating with Robert Lucas, that damaged the development of stabilization-relevant macroeconomics:

“Keynesian economics is dead.”
“Involuntary unemployment is not a fact or … 
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Making Sense of the Neoclassical Synthesis

 

In his History of Macroeconomics (2016), Michel De Vroey identifies the Early Keynesians’ neoclassical synthesis (NS) as a critical marker in the development of modern macro theory. Its importance is particularly evident in the enduring debate over the proper relation … 
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Linking the Workplace and Marketplace Venues

In addition to the intermarket linkages retained from mainstream SVGE modeling, including relative prices and elasticities that allocate various demands and supplies, the workplace and marketplace venues are connected, largely via three mechanisms. First is the dominance of LEV labor … 
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Three Necessary Models Are Missing

In one of the earliest contributions to what was later named efficiency-wage theory (EWT), a diagram was constructed in the attempt to capture practitioner descriptions of labor pricing in workplaces restricted by costly, asymmetric information. It portrayed the on-the-job behavior … 
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