Arthur Okun’s Forgotten Contribution

 I knew Arthur Okun. In the late 1960s and 1970s, Washington economists working at agencies variously tasked to stabilize the economy considered him to be the town’s preeminent macro theorist. He understood that  then-mainstream Keynesian modeling was centrally constructed both … 
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The GEM Project’s Incremental Roots

The GEM Project’s generalization of rational exchange from the marketplace to workplaces restricted by costly, asymmetric information and routinized employment is an incremental exercise. It has deep roots in the innovative work conducted in the middle 20th century by the … 
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Managerial Capitalism

A couple weeks ago this Blog focused on a central finding of the GEM Project’s research on the generalization of rational exchange from the marketplace to the workplace. The Second Industrial Revolution,  dating from the second half of the 19th … 
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Essential Generalized-Exchange Macroeconomics

 

Generalizing rational price-mediated exchange from the marketplace to workplaces restricted by costly, asymmetric employer-employee information and routinized jobs is an intuitive exercise that is essential if macroeconomics is to be simultaneously micro-coherent and stabilization-relevant. The GEM Project’s reconstruction of aggregate … 
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Classical versus Keynesian Business Cycles

 

Evolving macro instability. The Second Industrial Revolution is a fundamental, almost always ignored, dividing line in the on-going evolution of macro instability. Occurring initially in the United States, Great Britain, and Germany and eventually spreading globally, SIR is typically dated … 
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Rejecting the Single Monetary Objective

In a 2013 book (The Great Recession: Lessons for Central Bankers), Huw Pill and Frank Smets argue for preserving the status quo: “… the conduct of monetary policy should neither be changed fundamentally nor overburdened with additional objectives. Rather, it … 
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Starting Point for Macro Modeling

 

Generalized-exchange theory should be easy to love. Most significant among its many attributes, rational wage determination in the large-establishment venue (LEV) is derived from true axioms, producing both downward nominal inflexibility over stationary business cycles and chronic, time-varying wage rents. … 
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Disheartened by Blanchard, Part II

 

Olivier Blanchard is an admired economic theorist and gatekeeper, helping to guide New Keynesian (NK) thinking to mainstream status in macroeconomic research and dissemination. How then do we make sense out of his role in the costly NK failure to … 
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Practical Core of Macroeconomics

Last week’s post pushed the GEM Project’s agenda hard, hammering New Keynesian (NK) scholars for abandoning serious research on nominal wage rigidity capable of rationally suppressing labor-price recontracting. It argued that suppression is necessary for understanding the nature and consequences … 
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