It seems to me after reading numerous heterodox threads here, that heterodox economists seem to be mostly concerned with macroeconomics, while mainstream economists are very focused on microeconomics and building "microfoundations" for macro-models. I believe there was a book written on this arguing, from the heterodox side, that macro models should not require microfoundations. Is my assessment correct?
AMA. I'm a Post Keynesian.
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It seems to me after reading numerous heterodox threads here, that heterodox economists seem to be mostly concerned with macroeconomics, while mainstream economists are very focused on microeconomics and building "microfoundations" for macro-models. I believe there was a book written on this arguing, from the heterodox side, that macro models should not require microfoundations. Is my assessment correct?
Pretty accurate. Post Keynesians also have a micro framework.
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I am a little confused about what Post Keynesians think they have that the mainstream doesn't. Especially now that "HANK" models put high MPCs/balance sheet effects and a demand side in the same model. You have papers like Guerrieri/Lorenzoni that are explicitly about deleveraging working through demand amid rigid wages.
You can say that this is just the mainstream getting around to stuff that Post Keynesians have long known, and that would be right to an extent. Still, I'm curious what the big distinctive features now are supposed to be.
I'm not totally sure what "endogenous money" means, but it sounds like something that the mainstream already believes, although some stupid undergrad textbooks will still focus on irrelevancies like reserves and the money multiplier. Generally, macroeconomists believe that the banking sector will produce deposits endogenously in response to incentives like the demand for deposits and the cost of servicing them - seems like a fairly simple principle to me.
Some post Keynesians seem to take more strident views on positions that the mainstream is inherently ambiguous about. E.g. you'll flat-out call crowding out a "myth", whereas the mainstream would say that it's only applicable if monetary policy is aggressive enough.
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Depends on the context. Models are abstractions from reality. Are these assumptions relevant for the issue they are modelling or not? How much does the model change, if for instance, the mark-up is modeled in a different way. Again, if the conclusions turn out to be (very) sensitive to these assumptions you can write a model in which you relax them and publish it in a good journal.
However, most of the time when you see these assumptions you'll quickly find out that slightly changing the assumptions does not affect the main result of the model at all. Good theoretical (and empirical) economists distinguish themselves by quickly being able to spot the most relevant assumptions, and being able to see (or study empirically) what happens when you relax them.
What do you think of these assumptions - just random examples, you see:
"In the present model, it is assumed that prices are set as a markup on unit direct costs that consist entirely of wages." [The fact that the markup is exogenous is carefully swept under the rug.]
"the parameters in the above equations are all constant, implying constant unit costs and constant returns to scale. The wage rate is also assumed to be exogenous (and constant), and the markup stays the same regardless of the degree of capacity utilization"
"There is no government sector, so a fortiori there is no government debt, no high-powered money, and no currency ... banks do not make profits, so the rate of interest on money deposits and the rate of interest on loans are identical." -
How the hell did Notre Dame end up being a heterodox program? It seems odd given that it's a private school in a very conservative area.
Also I asked for evidence not for you to ask me a question.
The question was rhetorical.
The number of departments have shrunk (for example you lost notredame years ago). Your departments become more orthodox overtime and there is only a small number of you. So collectively 20 students come from the 3 or 4 schools, only a fraction will continue in the profession especially because employment oppurtunities are sparse. Mean mainstream programs have increased numbers and are gradauting more students than 20 years ago. Your numbers are shrinking, whether you admit it or not.I think Post-Keynesian Economics had been in secular decline from the 1980s-mid 2000s (from as you mentioned, the loss of Notre Dame and Cambridge more generally). The argument is that it's picked up since 2008.
UMKC didn't exist as heterodox institution until recently. We have Kingston now, a strong holdling in Ottawa, more unification in a place like UMass-Amherst (now that the Marxists are basically gone), significant and influential people in places in places like CUNY and Stonybrook, across Wallstreet (Chief Economists in places like Goldman Sachs, PIMCO, S&P, etc.), and an increasingly lively internet presence. This wasn't so noticeable 10 years ago. More importantly, we've begun winning the theoretical debates (i.e. endogenous money, anti-austerity, the "crowding out" myth, and most recently the notion that demand increases productivity, better known as Kaldor-Verdoorn's Law).
Give it another 5 or 10 years, and Post-Keynesians will represent an even more significant component of the Economics profession and debate. -
It seems to me after reading numerous heterodox threads here, that heterodox economists seem to be mostly concerned with macroeconomics, while mainstream economists are very focused on microeconomics and building "microfoundations" for macro-models. I believe there was a book written on this arguing, from the heterodox side, that macro models should not require microfoundations. Is my assessment correct?
That's a major reason for the difference in methodology between mainstream macro and PK macro.