David R. Henderson has the enviable task of being the Wall Street Journal’s go-to guy every year when the Nobel (Memorial) Prize in economics is announced. For this year’s recipients, David said the award was given to people whose work put “a sizable chink in the Keynesians’ armor.”
Now David gives a bunch of evidence to back up his claim, mostly focusing on Thomas Sargent. I don’t think anybody has (or can) deny that all of the specific things David cites are (a) true and (b) represent a challenge to Keynesianism either today, or what it used to be. (For example, Daniel Kuehn spins it by saying that S & S did indeed challenge the paradigm reigning in the 1950s, which just so happened to be Keynesianism. But hey, if Austrians had been dominant in the 1950s, then we’d be calling this an anti-Austrian Nobel. So why does Henderson view the attack on Keynesian models, as an attack on Keynesian models? Those nutty libertarians.)
Paul Krugman, of course, continues to get saddle sores from riding his high horse. In a post entitled “Nobel Lies” he declares:
What does an economics Nobel mean? What does it do? Not what some people seem to think.
Anyone who imagines that the Nobel can tip the balance between rival schools of thought in macroeconomics or anything else is just being silly. The committee that chooses each year’s Nobel is just a committee — smart, well-informed, and scrupulous, but not gifted with godlike powers of discernment not granted to mortal men.
Ohhh, so Paul Krugman would never, say, take Peter Diamond’s winning of a Nobel as evidence that Republican opponents of his views on monetary policy were a bunch of idiots… (I know, I know, that’s not a contradiction. When Krugman says someone’s views are dumb, that is an objective repudiation based on hard facts. When David R. Henderson does it, he is a lying ideologue.)
Anyway, David does have a bit of a problem because Sims himself came out and said he rejects the idea that his work is an attack on Keynesianism. I don’t know Sims’ work much, and perhaps David was indeed stretching by including him. However, as I said, in terms of what David cited in his WSJ piece, Sims’ work certainly did challenge the reigning Keynesianism of the time.
Also, for what it’s worth, I was in a meeting with a very prominent “right wing” economist on the day of the announcement, and Sargent winning was certainly seen as “an award for our side.” I guess you can say, “Right, just shows all of you ideologues aren’t scientists,” or, an alternate explanation is to say, “When a Keynesian wins, Krugman claims victory. When a non-Keynesian wins, Krugman says the award doesn’t pick sides.”