Possible Insight

I May Have Been Wrong About Macroeconomics

with 11 comments

When I was an undergraduate studying macroeconomics, I came to the conclusion that it was pretty much total bullshit.  Because I was in a co-terminal masters program, I was also studying graduate level decision theory, game theory, microeconomics, behavioral economics, and dynamic systems. In comparison, it seemed clear to me that macroeconomics was not a coherent study of a complex system.

Lately, Arnold Kling’s blog posts have been reinforcing this belief. However, we may both be wrong.  Arnold studied and practiced macroeconomics in the late 1970s.   Given the delay in propagating knowledge to the undergraduate level, that’s probably also what was taught in my late 1980s undergraduate textbook. However, Will Ambrosini observes that Arnold’s views are outdated and this is a problem with non-macro economists in general. He points to this essay and I find myself convinced that modern macroeconomics is a coherent study of a complex system.

I thought this might provide you some measure of comfort.  If anyone wants me to summarize the particulars of why I changed my mind, let me know.

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Written by Kevin

January 29, 2009 at 11:06 am

Posted in Government, Society

Tagged with ,

11 Responses

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  1. “If anyone wants me to summarize the particulars of why I changed my mind, let me know.”

    *raises hand*

    Thanks for the link!

    pushmedia1

    January 29, 2009 at 1:16 pm

  2. […] me well probably just did a spit take at that understatement).  So while I try to stand up and admit when I’m wrong, I also like to stand up and point out where I’m […]

  3. I was actually wondering if of anyone who wasn’t already an expert on this topic was curious about my reasons. For the cognoscenti, my objections to what I learned in macro were pretty much addressed by Woodford’s points (1), (2), and (3). By simply inverting those strengths of current macro, you have my perceived weaknesses of “old school” macro.

    As a bonus point for those who know Rafe and me personally, I actually should have realized my conception of macro was outdated back in graduate school. Rafe and I were roommates with another friend who was a PhD candidate in economics at the GSB. He once asked to borrow my dynamic systems book to get some background on the math they were doing in his advanced macro class. If I had been paying closer attention I would have realized that something important was up in macro circa 1991.

    kevindick

    January 29, 2009 at 2:40 pm

  4. Economics seems to be part politics and part bullshit… Why can’t the economists follow the standard observe – hypothesis – test cycle that all other social sciences do?

    Why do economists always dwell on the unprovable? Eg pure competition with a purely elastic product with a bunch of lines on a chart that act as a kind of proof. Has this ever existed?

    Anthony

    September 18, 2009 at 12:07 pm

  5. Anthony. I think you’re perception of the state of the art in economics is badly outdated.

    Kevin Dick

    September 18, 2009 at 2:02 pm

  6. What Kevin said.

    Scott Schaefer

    September 18, 2009 at 3:08 pm

    • Uh, Schaef, you might want not want to site that as evidence supporting the theory that “econ isn’t bullshit”. Rational agent and equilibrium assumptions are exactly what the critics harp on. There is better evidence than Lazear’s that econ is only pseudo-bullshit 🙂

      Rafe Furst

      September 19, 2009 at 2:44 pm

  7. I don’t think this article directly relates to your points, Kevin, but I found this article by Krugman from the NY Times Mag two weeks back pretty interesting. Talks about the current state of macroeconimic theory in language I could comprehend:

    http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html

    Jay Greenspan

    September 20, 2009 at 7:47 am

  8. @Jay. That article caused quite a stir in the econ blogosphere. Many economists, e.g., Sumner, think Krugman is being pretty unfair.

    Kevin Dick

    September 20, 2009 at 8:53 am

  9. […] me well probably just did a spit take at that understatement).  So while I try to stand up and admit when I’m wrong, I also like to stand up and point out where I’m […]


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