Blinders

Alan Blinder has what looked similar an interesting-looking essay inward the New York Review of Books, "What's the affair amongst economics?" Alan has commonly been thoughtful, the WSJ family liberal columnist, thence I approached it hoping for well-reasoned declaration I powerfulness disagree with, but endure interested past times as well as larn something from. And it started well, pointing out the many things on which economists all concord as well as policy does not.

Alas, as well as thence nosotros acquire to macro. Something nearly stimulus sends people off the deep end.  One picayune quote pretty much summarizes the tone as well as (lack of) usefulness of the whole thing:

The cracking Milton Friedman of the University of Chicago, a favorite target of Madrick, may bring been correct or wrong; but he was for sure far to the right. Much the same tin order notice endure said of several other economists cited past times Madrick equally representing the mainstream. For example, he quotes John Cochrane, also of the University of Chicago, equally proverb inward 2009 that Keynesian economic science is “not purpose of what anybody has taught graduate students since the 1960s. [Keynesian ideas] are fairy tales that bring been proved false.” The kickoff declaration is demonstrably false; the 2nd is absurd. People tin order notice as well as produce struggle over the macroeconomic views associated amongst the so-called Chicago School, but it’s clear that the views of that schoolhouse are far from the mainstream.

"Demonstrably false" as well as "absurd" are pretty strong.

Am I incorrect that graduate programs produce non learn whatever Keynesian economics? I went to hold off at the Princeton University Economics Department graduate course of education offerings. Following upwards on the ones titled "macro," I found

Esteban Rossi-Hansberg: Econ 522 Topics inward Macroecomics
Benjamin Moll: Macroeconomic Theory I (1st yr PhD): Lecture notes. Syllabus 
                          Advanced Macroeconomics I, Economics 521 (2nd Year PhD)  Syllabus

Chris Sims:   Macroeconomic Theory 504

First reaction: Wow, Princeton has a cracking macroeconomics program. I mean value I'll prevarication nearly my historic menstruation as well as apply equally a grad student.

Second reaction: There is null Keynesian economic science anywhere inward Princeton's graduate program. 

Alan: if you lot mean value it's "absurd" to field that nobody teaches Keynesian economic science inward graduate programs, you lot are revealing that you lot bring no thought what goes on inward modern graduate programs, including your own. 

(I may bring missed some, as well as non all syllabi are publicly available. If ISLM is taught anywhere inward Princeton's economic science PhD program, past times anyone other than Blinder himself, postal service link to comments or ship it to me as well as I'll endure glad to admit it.)

Forget nearly "absurd" as well as "mainstream." Alan, tin order notice you lot furnish whatever evidence that whatever PhD programme at a peak U.S. of A. of America Economics subdivision teaches whatever IS-LM Keynesian economic science at all?

(Lay readers may endure a flake confused nearly the presence of a few (surprisingly few) "new-Keynesian" mentions inward these references. "Keynesian" as well as "New-Keynesian" are equally unlike equally Ptolemaic as well as Copernican astronomy. Yeah, both are nearly the displace of the stars, but that's it. While 1 powerfulness excuse New York Review of Books readers for non knowing the distinction, that's non the point. Blinder, if he has read whatever academic papers inward the terminal xxx years, should know the distinction. Krugman is clear on the distinction, ofttimes savaging new-Keynesians. If that's his excuse for writing this, Blinder either reveals that he does non know the divergence betwixt Keynesian-- IS-LM--and new-Keynesian--Woodford, etc.--or that he does non know what's beingness taught inward his ain graduate program. Take your pick.)

As for "mainstream," Moll's syllabus starts 

Books:
- Stokey, Nancy, Robert E. Lucas Jr. as well as Edward C. Prescott (1989), “Recursive Methods in Economic Dynamics”
- Ljungqvist, Lars as well as Thomas J. Sargent (2004), “Recursive Macroeconomic Theory” 

How many Nobel Prizes bring been awarded for demolishing Keynesian Economics?  Lucas, Sargent, Prescott, Sims, Phelps, ... I may bring missed a few. How many for anything supporting it? 0 that I tin order notice find. (Update clarification: For Keynesian economics, non to "Keynesian" economists.) 

And readers of this spider web log sympathise the divergence betwixt "right" as well as "free market" or "libertarian." I presumed Blinder knew the divergence equally well. In illustration you lot forgot, Milton Friedman wanted drug legalization, opened upwards borders, the cease of the draft, as well as a few other anathema to the "right."

Alan goes on the Chicago laid on in 1 lawsuit again with

But what nearly the potent shape of the EMH? This “bad idea” proved pernicious, only equally Madrick says. The EMH (plus around fiscal engineering) gave Wall Street managers the tools amongst which to construct monstrosities similar CDOs (collateralized debt obligations) as well as CDSs (credit default swaps) on peak of the rickety foundation of subprime mortgages—and helped order Wall Street salesmen (and rating agencies) the chutzpah to pawn them off equally “safe” to credulous investors.

Alan, delight become read Fama 1970 as well as uncovering out what the Definition of potent shape EMH is earlier you lot acquire it incorrect inward impress again. Understand that it has nada to produce amongst derivatives. And that Fama 1970 showed the potent shape failed inward the data! You're only embarrassing yourself inward both cases, at to the lowest degree to academic audiences who sympathise this stuff.

But, hold off a minute, where bring I heard this before? Hmm. There's individual else who can't halt quoting the few paragraphs of my 2009 spider web log postal service (a actually authoritative source, eh?). Where bring I heard an laid on against "Chicago" that is xl years out of date? (Hint: Becker as well as Friedman are dead. Chicago right away is Getzkow, Goolsbee, Shapiro, Rajan, Zingales, Kashap, Hust, Diamond, Sufi, Seru; Shimer, Uhlig, Alvarez, as well as distressing for leaving everyone else out.)  

Oh yeah, Krugman. New York Times Magazine. September 2009. 

Keynesian economic science has been “proved false,” Cochrane, of the University of Chicago, says.

And thence Chicago’s Cochrane...declared: “It’s non purpose of what anybody has taught graduate students since the 1960s. They [Keynesian ideas] are fairy tales that bring been proved false. It is real comforting inward times of stress to become dorsum to the fairy tales nosotros heard equally children, but it doesn’t brand them less false.” (It’s a grade of how deep the sectionalization betwixt saltwater as well as freshwater runs that Cochrane doesn’t believe that “anybody” teaches ideas that are, inward fact, taught inward places similar Princeton, M.I.T. as well as Harvard.)

(In illustration you lot missed it -- it was a long fourth dimension agone -- my response. Influenza A virus subtype H5N1 beer at the AEA meetings if a spider web log reader tin order notice uncovering whatever serious teaching of ISLM inward MIT as well as Harvard's Ph.D. programme too. Two beers if you're a PhD pupil as well as you lot weren't chuckling the whole time.)

Alan, (and Jeff Madrick): are you lot such lazy readers that you lot bring fifty-fifty to plaigiarize your insults? Come upwards amongst something novel already!  I bring a whole spider web log to mine, addition a website, as well as dozens of economical articles! I'm sure you lot tin order notice produce amend than this.

I approximate Krugmanism is contagious. Too bad.