Notes for Week 1

Notes – ECON 488: 1/20

 

Is macroeconomics broken? Has the discipline failed? 

  • Broken…
    • Macro failed to predict the Great Recession
    • Is Macro still relevant to issues of welfare?
      • Economic inequality, poverty, environmental degradation
        • Greater the inequality, slower the growth rate
        • Measurements like the GDP don’t count for things like pollution, inequality, etc.
  • Theory does not equal reality
  • Politics is not included enough in macroeconomics
    • Shock variables include political effects
    • DAD/DAS model includes shocks which could be political
  • What about the models?
    • Maybe these are incorrect
    • We are so reliant on macroeconomic models that we cannot adjust to changing landscapes
  • What is Macro?
    • Macro is a view of the economy as a whole
    • What models are we using?
      • DSGE models
  • What are the “contemporary” schools of thought in Macroeconomics?
    • Classical
      • Monetarists
      • Neoclassical
      • Classical
      • Real Business Cycle models
      • New Classical (most recent)
      • “Freshwater”
    • Keynesian
      • Keynes
      • Keynesian
      • New Keynesian (most recent)
      • “Saltwater”
  • Heterodox
    • Austrian economics
    • Marxism
    • Post Keynesianism

Going further…

  • Who are the critics of Macroeconomics since the Great Recession?
    • Who are they? What do they have to say? What school of thought are they from?
    • Where have the New Classical economists gone?