Arnold Kling Is Not Impressed With Mainstream Macroeconomics
This guy might be crankier than me! He quotes from a widely circulated Blanchard paper that summarized the state of macro and concluded it was “good.” Kling merely paraphrases Blanchard’s observations (fairly, too–i.e. Kling isn’t putting words into Blanchard’s mouth), and then points out that one might easily have concluded that mainstream macro is in the toilet. Here’s Kling:
So, the state of macro is this:
1. We have a workhorse model, with no capital or financial markets.
2. We have some work on asymmetric information and financial markets that is not really integrated into the workhorse model, but which suggests that when “shocks” occur, their effects may be amplified relative to the workhorse model.
3. Real-world data have interesting patterns that either are unexplained by or contradict the most widely-used models.
4. Papers follow a “haiku-like” ritual in order to be published.And this is “good.” I agree with all four propositions, but I disagree with the conclusion.
Then in another angry post, Kling says:
I am shocked at the behavior of my fellow economists during this crisis. They are claiming to know much more than they do about causes and solutions. Rather than trying to understand and explain what is going on, they are engaged in a fierce battle over narrative.
Later on he has this quotable quote:
I have always thought that the issue of the relationship between financial markets and the “real economy” was really deep. I thought that it was a critical part of macroeconomic theory that was poorly developed. But the economics profession for the past thirty years instead focused on producing stochastic calculus porn to satisfy young men’s urge for mathematical masturbation.
I didn’t know Kling was so feisty! He’s bald so I bet he worries about everything like I do, too! As Little Big Man’s grandfather said (in reference to General Custer): “I’d like to meet this man, and smoke with him.”
