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Tuesday, June 24, 2014

'Was the Neoclassical Synthesis Unstable?'

The last paragraph from a much longer argument by Simon Wren-Lewis:

Was the neoclassical synthesis unstable?: ... Of course we have moved on from the 1980s. Yet in some respects we have not moved very far. With the counter revolution we swung from one methodological extreme to the other, and we have not moved much since. The admissibility of models still depends on their theoretical consistency rather than consistency with evidence. It is still seen as more important when building models of the business cycle to allow for the endogeneity of labour supply than to allow for involuntary unemployment. What this means is that many macroeconomists who think they are just ‘taking theory seriously’ are in fact applying a particular theoretical view which happens to suit the ideology of the counter revolutionaries. The key to changing that is to first accept it.

    Posted by on Tuesday, June 24, 2014 at 10:44 AM in Economics, Macroeconomics, Methodology | Permalink  Comments (11)

          


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