A History Of Macroeconomics From Keynes To Lucas And Beyond Pdf
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- My book on the history of macroeconomics
- A History of Macroeconomics from Keynes to Lucas and Beyond
- A History of Macroeconomics from Keynes to Lucas and Beyond
My book on the history of macroeconomics
A Review and a Comment on Miche Second, because it tries to analyze this convoluted history while addressing a broader audience than historians of macro economic thought. The book is at once, highly complex and enjoyably readable, deeply detailed but with a panoramic perspective, historically rigorous but never pedantically erudite. The reader never gets lost during this guided tour along the tortuous paths of the history, thanks to a good balance among three registers.
At the same time, De Vroey openly encourages historians to provide alternative histories, and to explore episodes and issues which he has decided to leave aside. This choice makes sense but potentially could be quite confusing for the reader.
This process is seen as the outgrowths of the different branches of a tree:. Any major bifurcation on the tree, that is, a new research line, starts as an original contribution, which in the beginning is like a thin new branch on a tree.
Its success hinges on the attention it receives. The original work must be considered sufficiently interesting to be elaborated on, and the ensuing chain of contributions building on each other is what makes the branch sturdy. Once mature, a research track may gradually lose its momentum: puzzles arise, objections are leveled, and doubt about its validity sets in. However, the dimensions within this divide go beyond the traditional conflict about how to address complexity, i.
De Vroey proposes a very peculiar understanding of what is meant by Marshallian or Walrasian along all those dimensions. Certainly, his vision could be criticized in many ways, and surely will be: still, it is a complex vision, subtle, and far from being binary or simplistic. Most importantly, the book shows that such a vision of the Marshall-Walras divide is an operational, useful framework for building a global perspective on the history of macroeconomics.
However, I think that the content and the insights in the new book are richer and more convincing. My feeling is that this is due precisely to a substantial refinement of the conception of Marshall-Walras. First, it develops a summary of the role of the Marshall-Walras divide in the history of macroeconomics chapter 19 ; second, it accounts for some debates in the wake of the crisis chapter 20 ; third, it offers some considerations about the future of the discipline chapter Chapters 1 and 2 address this transformation.
In chapter 1, De Vroey makes three basic claims. Second he claims that Keynes developed his explanation in a Marshallian framework. The last peculiar characteristic of the Keynesian paradigm is the notion of neoclassical synthesis, i.
According to the usual metaphor, neoclassical synthesis was merely agreement about a legitimate bifurcation in two branches of the tree. Chapter 3 presents the Keynesian contributions challenging this loose notion of a synthesis.
Roughly, this was an attempt to express Keynesian concepts involuntary unemployment, sluggish prices within a Walrasian framework. Such attempts were proposed especially by Klein and Patinkin These two alternatives research lines within the Keynesian paradigm are analyzed in chapters 6 and 7. De Vroey, while commenting the work of Patinkin in chapter 3, provides a clear explanation for this failure:. My inquiry in this book has led me to believe that any attempt at a Keynes-Walras synthesis is doomed to fail at least in so far as its Keynesian component has involuntary unemployment, defined as individual disequilibrium, at its core.
On this premise, De Vroey derives the following methodological roadmap:. If the ideological dimension cannot be erased, what must be done is to circumscribe its impact. That is, the profession should strive for a situation where it would not matter whether a given argument is underpinned by an ideological motivation because methodological criteria exist to gauge its validity whatever this motivation. The use of mathematical modeling as opposed to modeling in prose is a first step in this direction.
Yet, more is needed, namely, making the view adopted on the matter of the relationship of models and reality explicit, defining guidelines for econometric work, and, finally, enunciating the standards to be respected for sound theory construction.
All these choices are definitely a matter of convention and may always be impugned through a scientific revolution. This new concept was formulated simultaneously and independently by Phelps ; and Friedman According to De Vroey, Friedman was the more discussed and influential of the two at the time: however, his criticism was formulated within a Marshallian framework, and consequently, within the same branch of the decision tree as the Keynesian paradigm.
This is the general assessment in chapter 8 which concludes this first part of the book. At the end of the s, both the open criticisms mainly, Friedman and the alternative lines within the Keynesian paradigm Patinkin, Clower, etc. Indeed, these contributions did not go back as far as the fundamental decisional node, i. According to De Vroey, this is what distinguishes Friedman from Lucas, and what distinguish the debates within the Keynesian paradigm from a change in the paradigm.
This last is discussed in detail in chapter On the one hand, Lucas claims that the assumptions made in the theory are not propositions pertaining to the real world but simply modeling devices to ensure the internal consistency of models.
On the other hand, Lucas supports the view that macroeconomics should be an applied field, producing policy recommendations based on modeling. This makes those three chapters the cornerstone for further historiographic research, a thesis about recent macroeconomics that historians will certainly passionately debate. Chari, Chapter 12 is about total rejection but from two very different perspectives.
This heterogeneous group is identified with the contributors to a collected volume edited by Mankiw and Romer —which gathers four distinct approaches implicit contracts, staggered wages, efficiency wage, and menu costs. In this case, the distinctive element is rejection of the Walrasian auctioneer and development of alternative models of trade technology search behavior, strategic behavior.
It starts by discussing Kydland and Prescott's seminal paper, and then proceeds to address subsequent developments especially related to calibration, and reinterpretation of the neoclassical growth model which led to the RBC baseline model King, Plosser and Rebello, The important insight in this chapter and developed and completed in chapter 17 is on the divergences the convergences seem quite evident.
The RBC model clearly differs from Lucas's method in its the empirical method and its real explanation of the cycle. This leads directly to the conclusions in chapter 18, which closes De Vroey's history.
I conclude with some personal disappointment. As I have already said, in the introduction, De Vroey is quite explicit about the exact scope of his book:. I have chosen to give more emphasis to theoretical aspects than to empirical ones. My work is internal history and leaves aside most of the contextual dimension. I deal neither with pre-Keynesian macroeconomics nor with heterodox theory.
Moreover, although macroeconomics as it is understood at present encompasses both growth and business fluctuations, I will say nothing about the former xvi. However, empirical aspects occupy a great deal of space in this book. Empirical aspects play an active role in De Vroey's history narrated in this book.
For instance, they are crucial for determining the development of the two paradigms: indeed according to De Vroey, the Keynesian and Lucasian revolutions owed much of their success in the sense of Leijonhufvud's decisional tree to the development of a consistent empirical framework:. This is what it takes to have a successful revolution. Therefore, I like to regard the relationship between Lucas, and Kydland and Prescott, as mirroring that between Keynes and his immediate successors such as Hicks, Klein, and Modigliani.
What would have happened to The General Theory if it had not been transposed into the IS-LM model and if Klein had not extended it into an econometric framework? That means that empirical aspects underlie most of his assessments of various theories throughout the book.
A better one would have been a kind of Leijonhufvud decision tree, specific to empirical aspects. The evolution of econometrics in general, and macroeconometrics in particular, could have been appraised using this same framework, although it would have required reconsideration of the decisional node and especially, abandonment of the Marshall-Walras divide as the fundamental bifurcation.
What seems even more important is the idea that the decision tree of empirical developments overlaps the decision tree of theoretical development, i. Hence, instead of providing a separate analysis of the decision tree of theoretical developments of macroeconomics, De Vroey would have gained from parallel consideration of the decision tree of empirical techniques, and the interactions between them.
This would have provided a more complex and complete perspective, which would have enhanced the interdependencies among the empirical tools, theoretical apparatus, and modeling practices. In short, De Vroey would have gained from promoting more of a Walrasian than a Marshallian spirit in his approach to the history of recent macroeconomics.
Chari, Varadarajan V. Nobel Laureate Robert E. Lucas, Jr. The Journal of Economic Perspectives , 12 1 : Clower, Robert. In Frank Hahn and Frank P. Brechling eds. The Theory of Interes t Rates. London: Macmillan, De Vroey, Michel. Paris: Dalloz. Friedman, Milton. The Role of Monetary Policy.
The American Economic Review , 58 1 : Hicks, John R. A S uggested Interpretation. Econometrica , 5 2 : Klein, Lawrence. Economic Fluctuations in the United States, New-York: John Wiley. Journal of Monetary Economics , 21 : Kydland, Finn and Prescott, Edward C. Time to Build and Aggregate Fluctuations, Econometrica , 50 6 : Leijonhufvud, Axel. On Keynesian Economics and the Economics of Keynes.
Oxford: Oxford University Press. Hicks, Keynes and Marshall.
A History of Macroeconomics from Keynes to Lucas and Beyond
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A History of Macroeconomics from Keynes to Lucas and Beyond
A History of Macroeconomics: A Ma De Vroey has a true vision of macroeconomics, he shares it with his reader and gives clear guidelines to understand the developments in the field. Interestingly, the book adopts a very macroeconomic view of macroeconomics. First, like modern macroeconomics, the book is dynamic. This history of macroeconomics is not only backward looking, it is, like modern macroeconomics, forward looking.
A Review and a Comment on Miche Second, because it tries to analyze this convoluted history while addressing a broader audience than historians of macro economic thought.
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My book is primarily addressed to those macroeconomists, be they teachers or students, who feel the need to go beyond the technicalities that provide their daily bread and butter, and wish to ponder upon the origin of the kind of modeling they are familiar with. My wish is that it might be especially useful to graduate students and young academics. Their training is often purely technical and centered on the models of the day, as if there had been no useful past, and as if no conceptual or methodological problems inherited from the past still had an influence today. For advance praises and a full content listing, see the flyer below:. Search this site. My book on the history of macroeconomics. Report abuse.
Macroeconomists as Revolutionary Macroeconomists do like very much this framing even if they may use it to argue that there is consensus and progress, and you can take the accounts of three eminent macroeconomists as recent installments of this: Olivier Blanchard and , N.
Kevin D. Professor of economics, University of Louvain. History of Political Economy, vol. Cambridge Journal of Economics 8 4 , ,