Talk:History of macroeconomic thought

New Palgrave: Neglect of empirical economics and cheerleading for Austrian economics

I expanded the New Palgrave article, using Stigler and other sources.

• In particular, George Stigler is quoted about failings of Austrian economists and the zealotry of enthusiasts in contemporary economics: "An ersatz Austrian is apparently more loyal than the genuine article"
• There is extensive discussion of the failure to discuss empirical economics, which Milgate acknowledged was a mistake, insofar as the reference had been trying to represent professional economics.

Both these issues have been discussed on this page.  Kiefer.Wolfowitz 21:03, 26 February 2012 (UTC)

I'm not going to argue with your edits to the first paragraph of the section, but I do want to make sure the section on ABCT stays. ABCT is clearly the part of Austrian economics that is relevant here. We've already been through debates on whether Austrian economics should be covered and whether Austrians had undue weight in the article. Rinconsoleao and LK both agreed that the section as it was this summer (which basically consisted of what you removed) gave appropriate weight. Byelf2007 reinserted the section after you attempted to remove it the most recent time. There has been a consensus to include this material, please stop removing it. Also, please explain why you feel it's "cheerleading." I can't understand why you think a technical explanation of ABCT is "cheerleading."--Bkwillwm (talk) 03:38, 27 February 2012 (UTC)

You need a secondary reference on Garrison's importance, in this a review of macro history. Try JEL. (It is somewhat undue weight that Econometric Society Presidents, and EEA Presidents like Malinvaud, Drèze, Hahn, etc. get sentences and Garrison's one paper get's a paragraph.)  Kiefer.Wolfowitz 07:26, 27 February 2012 (UTC)

Garrison is a secondary source. The cited work is a book chapter not a paper, and Garrison is explaining Hayek's theory not his own. The fact that Snowdon and Vane gave chapters to Post Keynesianism and Austrian economics acts as a secondary source for their significance. I know you have expressed concern about S&V before, but I think it's unfounded. They managed to get many great economists, including Bob Solow, to sit for interviews for their book. I also came across a mention of a precursor work as a popular textbook (http://voxeu.org/index.php?q=node/7656). We've already discussed these weighting issues before.--Bkwillwm (talk) 07:39, 28 February 2012 (UTC)

Would you please reword the Garrison paragraph so that it is shorter and that it clearly explains that it is only explaining Hayek's "theory".  Kiefer.Wolfowitz 09:42, 28 February 2012 (UTC)

It looks better.

The obvious question is whether anybody has tried to evaluate the ABC theory, deductively (e.g. by its consistency with Arrow-Debreu GE theory) or empirically (e.g. by econometric competition against a competing theory, for example). What have critics said about the ABC theory? (Stigler mentioned errors and sectarianism---nasty misrepresentation of others, particularly the German Historical School---as faults.)  Kiefer.Wolfowitz 15:22, 28 February 2012 (UTC)

Per the marginalization of the Austrians, I don't think mainstream economists even bother with ABC theory. I've seen a couple Austrian papers that claim emprical validity for ABC models. I've heard rational expectations critiques that the ABC model requires a sort of interest rate surprise that is not consistent with RE since agents would adapt to and predict interest rate changes in ways that would breakdown the ABC mechanisms. I'm not sure I've seen this published though.--Bkwillwm (talk) 18:47, 28 February 2012 (UTC)

That is the kind of evaluation I want! Great!  Kiefer.Wolfowitz 20:28, 28 February 2012 (UTC)

A few things you should be aware of (2 and 3 are in the ABCT criticisms section). One-Few entrepreneurs are very familiar with ABCT. Two-Some argue that artificially low interest rates put entrepreneurs in a prisoner's-dilemma-type situation. Three-Some argue that it's difficult for entrepreneurs to make sound decisions because they're enable to know what the market rate for credit would be. Byelf2007 (talk) 29 February 2012

Nom for FA

Moved from Wikipedia talk:WikiProject Economics § Nom for FA

I would like to nominated History of macroeconomic thought as a featured article again. I nominated it once before, but it mainly failed over content disputes. I have tried to improve the article further, gotten it listed as a "Good Article," and it should be ready for another FA nomination. Please let me know what you think of the article. I'd like to resolve any disputes or other issues before making a nomination.--Bkwillwm (talk) 05:00, 5 January 2014 (UTC)

I wish it had more about the relation between income distribution and aggregate demand. That's been central to the political debates around macroeconomics for most if not almost all of the past century. EllenCT (talk) 06:41, 5 January 2014 (UTC)

Is there something specific you had in mind? I don't think inequality figures much in macroeconomic theory up to the present. Inequality has been an important part of the political discussion, but it hasn't been worked into influential macroeconomic models. I tried using a variety of secondary sources on the history of macro to determine the topical contents and weight of the article. None of these says much about inequality. We would need a strong source to back adding something on this to the article without creating a weight issue.

I had considered adding a Marxian economics sub-section to the heterodox section, but I'm not sure that would get at the relationship you're talking about.--Bkwillwm (talk) 21:34, 5 January 2014 (UTC)

Heller's description of how government expenditure was set to obtain http://research.stlouisfed.org/fred2/series/NROU ("Taxes are a leakage from the income stream in the same sense of saving. Equilibrium requires that leakages in the form of net taxes plus saving must be offset by investment expenditures and government purchases of goods and services.... 'our fiscal policy targets have been recast in terms of "full" or "high" employment levels of output, specifically the level of GNP associated with a 4-percent rate of unemployment.'" —Peterson, Wallace C. (1992). "Chapter 9. Public Expenditures, Taxes, and Finance". Income, employment, and economic growth (7th ed.). New York: Norton. pp. 364–70. ISBN 0-393-96139-7. {{cite book}}: |access-date= requires |url= (help); Unknown parameter |coauthors= ignored (|author= suggested) (help) Quoting Walter Heller) is nowhere near Marxian. I would also like to know how it got up from 4.0 to 5.3 in such a short time. EllenCT (talk) 03:33, 6 January 2014 (UTC)

I don't see anything in that quote regarding inequality.--Bkwillwm (talk) 16:14, 7 January 2014 (UTC)

Do you see how setting fiscal and monetary policy to achieve a given unemployment target is related to the income distribution? All other things being equal, what is the difference in the income distribution of a population with 4% and 14% unemployment? Is there any other policy goal of an unemployment rate target than supporting a particular income distribution? EllenCT (talk) 00:04, 8 January 2014 (UTC)

You're drawing your own conclusion from a source. That's definitely not going to fly in an FA because of WP:Synthesis and WP:OR. The quoted text makes no mention of inequality or the income distribution. Using this reference to draw a conclusion about these topics would clearly violate WP policies. Moreover, this relationship doesn't belong in a history of macroeconomic thought since it's not a documented theory.--Bkwillwm (talk) 02:48, 8 January 2014 (UTC)

The title of the book is Income, employment, and economic growth. I didn't write it, Peterson and Estenson did, and they documented Heller's quote. Are you saying that the relationship between employment and income is not necessarily related to the income distribution or inequality without the addition of something else that causes it to be a synthesis? If so, then what is that other thing? The whole reason that monetary policy has been relegated to the Fed is so that they can still make their NAIRU target no matter what Congress ends up doing fiscally, isn't it? When I do transcript searches of economic news anywhere, the US monetary policy deliberations at the FOMC to set short term interest rates to support the NAIRU target occurs at least once per month from any serious source, even when actual news about it only occurs quarterly. The brief mention in the "Criticizing and augmenting the Phillips curve" section doesn't do that much trade press interest justice. And the paragraph on Knut Wicksell with the word "natural" in scare quotes belies that there is a whole lot more to the real story. And why do we attribute to Blanchard and Summers (1986) the explanation that employment didn't recover because interest rates were kept so high for so long in the early 1980s as a response to stagflation? A lot of people noticed that way before 1986. EllenCT (talk) 02:50, 9 January 2014 (UTC)

Yes, income and income distribution are not the same thing. There are plenty of economic theories that make statements about how income is determined without stating how it is distributed. A factor might cause income to rise or decline but that wouldn't tell us anything about whether it made the distribution more or less equal. Even given a source that describes the relationship you're advocating, there isn't any evidence it's a key part of the history of macroeconomic thought.

"..doesn't do that much trade press interest justice." I can't figure out what this means.

The article does not attribute anything regarding interest rates to Blanchard and Summers (1986). The article discusses their insider-outsider model, not their views on interest rates.--Bkwillwm (talk) 05:27, 9 January 2014 (UTC)

Does the unemployment rate effect the income level, the income distribution, or both? By doing justice to the amount of trade press a concept receives, I mean that articles intended for a general audience should still be comprehensible to beginners, and one of the best ways to do that is to use the concepts with which they are already familiar. Since the importance of the short term interest rates is continuously emphasized, it probably deserves at least a handful more sentences. EllenCT (talk) 06:09, 9 January 2014 (UTC)

Not sure what you're getting at by asking about unemployment and its affects on income and income distribution. We have to work from sources. You haven't mentioned any sources discussing this. I you do make a good point on interest rates. The article doesn't pay enough attention to them in their role in Keynes's theory and IS-LM.--Bkwillwm (talk) 04:26, 12 January 2014 (UTC)

Can you get the exact date of that Walter Heller quote from Chapter 9 from above? You can link it in to Janet Yellen#Philosophy and maybe put a link to the new section from that article for extra eyes for review, because that article is currently linked from the Main Page. Good luck! I am going to be super busy in real life this week. EllenCT (talk) 23:36, 12 January 2014 (UTC)

Peer review

Should we subject this article to peer review? Lbertolotti (talk) 15:16, 12 August 2015 (UTC)

New section on political economy, institutions, and inequality

I was thinking of adding a new section on the role of institutions and political economy in recent macroeconomic thought. The section would cover Thomas Piketty's Capital in the Twenty-First Century, focusing on inequality and Piketty's r>g insight, and Daron Acemoglu's work including Why Nations Fail. I would trim the 2008 financial crisis section since much of its content is no longer pertinent to make "room" for the new content. Is there anything else that should be included? Does it make sense to include these topics as recent developments in macroeconomic theory?--Bkwillwm (talk) 06:33, 31 December 2015 (UTC)

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