Lesson One: Centrality of Finance

Evolution or Revolution, the macro academy’s most recent  installment in its annual series on the lessons from the Great Recession, was just released. Edited by Olivier Blanchard and Lawrence Summers (hereafter B&S), the book illustrates the box in which mainstream … 
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About the GEM Project

The GEM Project is all about the crucial need to restore meaningful wage rigidity to its Early-Keynesian centrality in macroeconomics. MWR is defined by its capacity to rationally suppress wage recontracting. EK theorists made it the keystone of their stabilization-relevant … 
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Unhappy News about Knut Wicksell

Along with Philip Wicksteed, the Swedish economist Knut Wicksell (1851-1926) constructed an elegant neoclassical model of factor-income distribution that has been remarkably enduring. I have long admired Wicksell and admit to feeling sad that the GEM Project’s generalized-exchange macro model … 
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Two Important Growth Models

This post is the last of the five-part series on the contribution of the GEM Project to growth macroeconomics. What follows looks at two powerful theories of trend macrodynamics that aren’t a good fit in market-centric modeling and are, as … 
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Use and Abuse of the Solow Residual

 

 Robert Solow’s neoclassical growth theory, to his surprise, provided the framework that rigorous general-market-equilibrium modeling has long used to explain trend and cyclical economic performance. This post, the fourth in a 5-part summary of the GEM Project’s contribution to growth … 
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Generalizing Solow’s Growth Model

Providing the mainstream literature’s go-to explanation for trend macrodynamics is Robert Solow’s (1956, 1957) neoclassical growth theory. Along with Sir Arthur Lewis’s two-venue theory featured last week, Solow broke the problematic mechanical link between saving and growth.

Basic model. Recall last … 
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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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