Frankly, I don’t feel like writing about this anymore except to register my general dissatisfaction with the recent criticisms of modern macroeconomics. The critics don’t seem to have noticed the progress made in the field in the last several decades.
- Wilkinson – Macro people have been studying social psychology (aka expectations) for a long time. We know something about it. I do agree, however, that we know very little about how fiscal policy affects expectations.
- Kling – I’m sorry you hated your graduate macro class in the 70s. There’s been progress since then. Substantive criticism here.
- Krugman – Fama’s not a macroeconomist so his his writings are a noisy signal from which to glean information about the state of knowledge in macroeconomics and you’re ignoring everything but the first couple of paragraphs of Cochrane’s paper.
- Waldman – Everyone in macro uses DSGE models with imperfect competition and price stickiness. And, horrors, everybody assumes rational expectations except when, of course, they don’t. The freshwater vs. saltwater distinction is moot. The debate is about what frictions matter, not whether or not there are frictions and its certainly not about methodology.
- Wolfers – Did you check to see how many references to “phlogiston” there are in the physics literature lately? Does ideological bias explain this trend? Those bastard right- (or is it left-) leaning physicists! Grrr… the answer is fiscal policy doesn’t F-ing work so why F-ing study it!!!111!!!
This isn’t these critics’ fault, of course. Macro people have been bad at getting the message out.
If you really care about the state of knowledge in macroeconomics, there’s a great set of papers in the inaugural edition of the the AEJ: Macroeconomics journal. I like the Michael Woodford paper the best. It is accessible to everybody.