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Tuesday, August 04, 2015

'Sarcasm and Science'

On the road again, so just a couple of quick posts. This is Paul Krugman:

Sarcasm and Science: Paul Romer continues his discussion of the wrong turn of freshwater economics, responding in part to my own entry, and makes a surprising suggestion — that Lucas and his followers were driven into their adversarial style by Robert Solow’s sarcasm...
Now, it’s true that people can get remarkably bent out of shape at the suggestion that they’re being silly and foolish. ...
But Romer’s account of the great wrong turn still sounds much too contingent to me...
At least as I perceived it then — and remember, I was a grad student as much of this was going on — there were two other big factors.
First, there was a political component. Equilibrium business cycle theory denied that fiscal or monetary policy could play a useful role in managing the economy, and this was a very appealing conclusion on one side of the political spectrum. This surely was a big reason the freshwater school immediately declared total victory over Keynes well before its approach had been properly vetted, and why it could not back down when the vetting actually took place and the doctrine was found wanting.
Second — and this may be less apparent to non-economists — there was the toolkit factor. Lucas-type models introduced a new set of modeling and mathematical tools — tools that required a significant investment of time and effort to learn, but which, once learned, let you impress everyone with your technical proficiency. For those who had made that investment, there was a real incentive to insist that models using those tools, and only models using those tools, were the way to go in all future research. ...
And of course at this point all of these factors have been greatly reinforced by the law of diminishing disciples: Lucas’s intellectual grandchildren are utterly unable to consider the possibility that they might be on the wrong track.

    Posted by on Tuesday, August 4, 2015 at 10:20 AM in Economics, Macroeconomics, Methodology | Permalink  Comments (25)


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