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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Misinterpreting the Monthly Employment Report
The Bureau of Labor Statistics released its monthly Employment Situation report this morning. The report is a recurring opportunity for the press to misinterpret what is going on in the U.S. economy. From the on-line edition of The Wall Street …
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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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John Bates Clark, Distinguished Economist
John Bates Clark (1847-1938) was the most distinguished American economist of his time. To me, he is especially interesting for two reasons. First, his career focused on the same important, difficult issue that a century later has motivated the GEM …
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The GEM Project’s Take on Brexit
Good economic theories help us understand big events as they are happening. What we most want is guidance on how they are likely to play out over time, both the short- and long-run. Good models are especially valuable in circumstances …
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