Graduate student Noah Smith reports on the state of graduate education in macroeconomics — here’s the part I found most interesting (but read the whole thing):
.. as someone who never studied econ as an undergrad (I was a physics major), I learned everything I know about macro from my grad courses. If there is . . . → Read More: A Grad Student Weighs in on Contemporary Grad School Macro
From Roman Frydman and Michael Goldberg’s new book Beyond Rational Markets: Asset Price Swings, Risk, and the Role of the State:
The problem that haunts the Rational Expectations Hypothesis is the same one that doomed socialist planning: no fully predetermined mechanism that drives market outcomes can, in principle, be uncovered. Basing the explanation of market . . . → Read More: Frydman & Goldberg on Robert Lucas & F. A. Hayek
Larry Summers at Bretton Woods on what was driving the macroeconomics which Summers sees as completely unhelpful in the current crisis:
“[The sociology of the macroeconomic profession of the last 30 years was marked by] attempts at “science” and by the tendency to study issues that where more tractable rather than to study issues that . . . → Read More: TRANSCRIPT: Larry Summers on Scientism, Mathematical Tractability & the Cognitive Failure of Modern Macroeconomics
Larry Summers’ remarks at Bretton Woods on liquidity and asset markets, his remarks on tractability in economics, economic education, and the advance of science, etc. are very Hayekian in flavor — for all of Summer’s vulgar Keynesian political economy and his standard issue ignorance of Hayek’s macroeconomics. Some funny lines from Summers here as well. . . . → Read More: VIDEO: Larry Summers with Martin Wolf at Bretton Woods — Hayek Resembles that Remark
I’m a bit worried, however, Michael Spence has not gotten the memo — i.e. he seems yet to internalize the seminally consequential scientific insight recently re-advertised by David Laidler that “a monetary economy has .. properties that cannot be analyzed using the tools of Arrow-Debreu style equilibrium modeling.”
the good news is . . . → Read More: Michael Spence on Where Macroeconomics Goes From Here
a monetary economy has long been understood by those who have studied it to have properties that cannot be analyzed using the tools of Arrow-Debreu style equilibrium modeling
I’ve laid out the “Hayek-Mises” considerations which establish this fact as a matter of logic to macroeconomists like Stephen Williamson and Nick Rowe. Disturbingly, the . . . → Read More: Quote of the Day – Laidler on Monetary Economics & Equilibrium Modeling
The most remarkable aspect of the recent conference at the IMF was the broad consensus that the macroeconomic models that had been relied upon in the past and had informed major aspects of monetary and macro-policy had failed. They failed to predict the crisis; standard models even said bubbles couldn’t exist .. Even . . . → Read More: MACROECONOMICS PROFESSION CONCEDES TO WILLIAM WHITE
Jordi Gali’s Monetary Policy, Inflation, and the Business Cycle: An Introduction to the New Keynesian Framework is self-recommending for the clarity of its writing, the coherence of its organization, and the usefulness of the references to the literature.
Here and here.
Michael Woodford seems to be sitting in the same boat.
Or, adaptive Hayekian judgment vs rational expectations — Axel Leijonhufvud knocks macroeconomic heads with some obvious facts about the difference between the real world and the math constructs fashionable among the professorial elite — under the (false?) assumption that macroeconomists can be reached using such primitive tools as reasoned argument and empirical evidence. Quotable:
“The . . . → Read More: OPEN SYSTEM ECONOMICS VS CLOSED MATH CONSTRUCT ECONOMICS
Hayek’s early work on business cycles focused on misalignments in the structure of production. Alas, this was basically impossible to formalize. Keyenes’s model, meanwhile, was adopted into the Hansen-Hicks synthesis that looked a lot like the simple Supply/Demand equations economists were used to, so everything seemed copacetic. A bad idea, in a tractable model, . . . → Read More: FALKENSTEIN ON MACROECONOMICS & THE GENIUSES AT MIT
On the front page of the Wall Street Journal.
And Hayek also turns up again on the WSJ Op-Ed page.