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Title: Thoughts About the Evolution of Mainstream Macroeconomics Over the
Last 40 Years

Link: https://slashdot.org/story/25/05/19/130213/th...

Abstract of a paper featured on NBER: This year marks the 40th anniversary of
the NBER Macro Annual Conference, founded in 1986. This paper reviews the
evolution of mainstream macroeconomics since then. It presents my views,
informed by a survey of a number of researchers who have made important
contributions to the field. I develop two main arguments. The first is that,
starting from strikingly different positions, there has been substantial
convergence, in terms of methodology, architecture, and main mechanisms.
Methodology: Explicit micro foundations, explicit treatment of distortions,
with, at the same time, an increased willingness to deviate from rational
expectations, neoclassical utility and profit maximization. Architecture: The
wide acceptance of nominal rigidities as an essential distortion, although
with mixed feelings. Mechanisms: The wide nature of the shocks to both the
demand and the supply side. The second is that this convergence has been, for
the most part, good convergence, i.e. the creation of a generally accepted
conceptual and analytical structure, a core to which additional distortions
can be added, allowing for discussions and integration of new ideas and
evidence, rather than fights about basic methodology. Not everything is right
however, with too much emphasis on general equilibrium implications from the
start, rather than, first, on partial equilibrium analysis of the phenomenon
at hand.

Read more of this story at Slashdot.

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