Menu Costs and Phillips Curves: The CalvoPlus Model and Intermediate Inputs

Awhile back, I posted a summary of a paper by Golosov and Lucas. The paper is important because it raises questions about the ability of New Keynesian models to explain fluctuations in real output...more>>

Should Policymakers Try to Stabilize the Economy?

The other issue concerns the practical problems with intervention. Since the "creative destruction" idea gets plenty of ink, and since I don't agree with it, let me offer a few thoughts on some of the difficulties policymakers face in trying to stabilize output and employment...more>>

JAMES K GALBRAITH VS. PAUL KRUGMAN

I don't accept that much of use can be learned about policy in this way. When the world deviates from the principles, as it usually does, the simple lessons go astray. This is not a complaint against math. It is a complaint against indiscriminate application of the deductive method, sometimes called the Ricardian vice, to problems of human action. Mine is an old gripe against much of what professional economists do; not against science but against scientism, against the pretense of science. To combat it, I spend my research time wrestling with real-world data, and I spend much of my writing time warring against the policy ideas of aggressive, ahistorical deductivists....more>>

Money Debates

Does money matter? The answer depends on who's talking. Suffice to say, however, Milton Friedman's dictum that inflation is always and everywhere a monetary phenomenon is now debatable in the academic community as well as in the board rooms of central banks around the world...more>>

Are Economists Different?

I've been thinking about economists. We are a different breed, I think, at least in one sense. We see markets everywhere. Thinking of getting married? We see a marriage market where partners rationally look at the costs and benefits of a "partnership" and decide accordingly. It is all very sterile and scientific, nothing more than supply and demand, like always...more>>