^^^ I'm not defending modern macro, but that is a silly standard to judge research by. By that measure, most mathematics departments would be emptied and their faculty fired, even though mathematicians are probably the most useful researchers in the world.
Research is an uncertain game, and sometimes it takes years for seeds to bear fruit. You can't use a myopic standard like that to determine the value of people's work.
Without the development in mathmatics, our modern civilization would not have been possilble. We couldn't have cars, buildings, bridges, chemicals, or whatever. What about modern macro? Could you just tell me just one thing that could not have existed without modern macro?
^FDIC
FDIC was created by Glass Steagall Act in 1933, when there was no such a thing as DSGE or something like that.
Why are mathematicians so useful? I don't think they justify their work by that measure, and rightly so.
People, read Mathematician's Apology by Hardy. He took pride in number theory BECAUSE it had no applications (little did he know -- cryptography in WW2).
It's in public domain in Canada.
http://www.math.ualberta.ca/~mss/misc/A%20Mathematician's%20Apology.pdf
"Why are mathematicians so useful? I don't think they justify their work by that measure, and rightly so."
The average research paper might not be useful. However one should count some mathematics as among the inputs for engineering, physical science, probability/statistics and computer science.
"The mathematics which can be used ‘for ordinary purposes by ordinary men’ is negligible, and that which can be used by economists or sociologist hardly rises to ‘scholarship standard’."
Similarly, I'm not sure "usefulness" is the best criterion for all research in economics, or other fields, either.
Chari is correct that there is way too little money given to macro research in the US. Europe will soon be dumping huge wads, up to a billion euros into it. But large chunks of new US money should go to ABM/ACE such as the impending Axtell-Farmer project, rather than the wacked-out-desperate-to-save-face MN gang of Chari.