10 thoughts on “Question”

  1. Definitely compliments, but right now “pictures and talk” is code for Keynesianism for Lucas, and “mathematical analysis” is code for whatever anti-macro people don’t currently like about macro.

  2. Gabe, what does Lucas have to do with it? What’s “Keynesianism”? Calvo? Lolz. Who cares?

    Push, you wouldn’t “heh” if you would give papers more often to departments south of Duke. Some of us have to face a lot of weirdness, to be polite about it. Along the lines of having a core professor say how much he hates MWG (obviously not using it).

    Some of the reactions to Samuelson’s death betray an intense hatred (feeling of inferiority?) towards anything math-y.

  3. agent-Lucas made the comment. I wouldn’t put Calvo as a main “Keynesian”.

    The people that belittle “pictures and talk” usually still subscribe to theories based on residuals that are almost totally uninformative for the reality of any actual business cycles. These theories simply reflect an ideological opposition to the possibility of policy effectiveness despite all evidence to the contrary. This is usually paired with a view of the labor market that’s indistinguishable from a market for apples and a confusion of basic concepts like leisure and unemployment. That’s what I was getting at.

  4. Sraffa, Lucas is a towering figure in the history of macro and he laid down some very good guidelines for method, but he’s not at the forefront of macro research, so why bring him up was my point. I take Koncherlakota’s “stuff.pdf” as a better description of who’s at the forefront and what they are doing.

    Re: “Keynesianism”, what makes a contemporary model “Keynesian”? Having Calvo pricing. What else is there?

    No one has a good story for shocks, so “people in glass houses”… Or are “people are crazy” and the like a whole lot better? — mostly everybody does research on propagation.

    Neoclassical and Keynesians agree that price-setting and wage-setting behavior is probably very important over the cycle. Keynesianism simply don’t want to be constrained by the discipline of general equilibrium/microfoundations and they do crazy stuff like shock much more of their parameters and imposing mechanical price stickiness (Calvo again).

    Neoclassical might shock TFP but New Keynesians will shock a lot more stranger stuff: see Chari, Kehoe & McGrattan “not yet useful for policy” paper on the gory details.

  5. agent- Fair enough, but Lucas made the quote that’s the subject of the post.

    Contemporary model are “New Keynesian.” Price stickiness was not actually seen by Keynes as being the main driver of recessions, though it is mentioned in the GT, so calling all these theories “New Keynesian” is kind of a misnomer.

    Re: “good stories for shocks”, then there has to be more work on it. I don’t buy the argument that because our theory of shocks is imperfect that we should accept ridiculous shocks like exogeneous negative productivity shocks measured as a residual. I don’t think “people are crazy.” But “leisure shocks” and other such nonsense is not much better.

    I have seen CKM and they make some good points. The New Keynesian literature is definitley unsatisfying in many respects, esp. inflation persistence. But the use of models than rely on exogeneous negative productivity shocks are ironically the best example of negative productivity shocks hitting economics.

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