Sam, Fred and the deer in the road

A story: Fred is driving a car down a deserted highway in the middle of the night. His friend Sam is in the passenger seat. Fred reaches down to pick up something he dropped, taking his eyes off the road ((or maybe he doesn’t know he’s driving)). When he lifts his gaze back to the […]

The blogosphere is catching up

I see the blogosphere has caught up to the early nineties in the macroeconomics debate. As Larry Summers argued — in 1988! — there are problems, like the Great Depression, with real business cycle theory. How can supply shocks explain such hugemongous declines in GDP? Cole and Ohanian subsequently took up that challenge — in […]

The Economist doesn’t understand marginal analysis

Strange for a magazine with such a name that they don’t know about Alfred Marshall and his marginalist revolution. See, when someone uses marginal analysis to show, unequivocally, that increases (*ahem* marginal increases *ahem*) in unemployment insurance benefits depresses employment, its not ok call them names for not doing inframarginal analysis. Its not ok to […]

History of all of modern macro (ignoring the last 30 years)

Prof. Delong has a nice summary of the pre-RBC (aka “purist”) macro literature of the 70′s: The underlying argument went something like this: (i) There is no sense talking about anything like “involuntary unemployment”: markets clear, and at all times people work as much as they want to work and firms produce as much as […]

Today’s theme: Social Calculation

McArdle esr Tabarrok

Economics History course at CR

For the two of you in Humboldt reading this blog (three if you count my mom… howdy Ma!), I’ll be teaching an economic history course (econ 20) at College of the Redwoods this summer starting next Tuesday. Lectures are in the evening, so you can use work as an excuse. Sign up! Yes, we’ll be […]

Learn economics, be entertained

I think economics turns students off because of its Libertarian bent… all the invisible hand stuff ((All of which I buy hook, line and sinker.)) makes ‘em think economics=”greed is good”. This, on the other hand, is how economics should be taught: In fact, if Joseph Heath’s Filthy Lucre turns out to be any good, […]

Psychology : Economics :: Physics : Chemistry

“Markets don’t seek efficiency because investors aren’t rational.” Yeah, well, gas molecules aren’t rational either, but they obey very simple regularities in large numbers. Rational-expectations theory doesn’t actually require individual investors to be rational, it merely predicts that en masse they will behave as if they are. — esr I’ve made this analogy before and […]

“Green Shoots”

I knew it reminded me of something… I’ve plugged it before as the best economics movie. You should see Being There if you haven’t already.

Mankiw’s introduction to DSGE

I genuinely want to know if this does anything for anyone. Does understanding the basics of DSGE help you understand the economy better (vs. the traditional AD/AS model or vs. whatever theory you have floating in your head)? Does it help you understand the current recession better? Seriously, what do you think? I’m teaching intermediate […]