McCloskey on the American question



Steven N.S. Cheung has his doubts about the most famous parable about the theory of the firm

How neoclassical are New Keynesian dynamic stochastic general equilibrium models?

In sum, New Keynesian models are most certainly not reincarnations of textbook IS–LM models with maximization added on. Rather, they are real business cycle models augmented with a few distortions—typically sticky prices and monopoly power—and shocks that do little to contribute to fluctuations or influence the nature of optimal policy

From Kehoe, Patrick J., Virgiliu Midrigan, and Elena Pastorino. 2018. “Evolution of Modern Business Cycle Models: Accounting for the Great Recession.” Journal of Economic Perspectives, 32 (3): 141-66.

“Mainstream economists reach mathematical conclusions about their model of the economy that they don’t like…and are then willing to make patently absurd assumptions to rescue their desired equilibrium conclusion” @ProfSteveKeen with a list from Deirdre McCloskey on what is yet to be shored up

Sargent on history as written by the late switchers, saying I thought of that too; said so in a footnote, in a seminar or as an aside. But Sargent was at Berkeley, knowing who is against everything he, Lucas and others said

From Reactions to the Berkeley story Thomas J. Sargent October 21, 2002