Thursday, July 12, 2012
Simon Wren-Lewis — Crisis, what crisis? Arrogance and self-satisfaction among macroeconomists
Prof. Wren-Lewis is still resistant to contemplating change, or even compromise. I left another comment suggesting that he read Wynne Godley.
Read it at mainly macro
Crisis, what crisis? Arrogance and self-satisfaction among macroeconomists
by Simon Wren-Lewis
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15 comments:
Tom,
Have you read Monetary Economics yet? If so, can you explain what you get from it that you don't get from more conventional models?
vimothy, I will let Wynne Godley answer that himself. He said that was uncomfortable with the approach to economics and proposed a new approach to macro economics based on modeling in terms of a stock flow consistent approach using sectoral balances.
Wren-Lewis has given no indication that he is open to actually looking at what successful heterodox people have proposed, and I proposed to him that Godley's views base on his approach were very effective in predicting major economic events that the mainstream missed.
I am in no position to argue economics with Wren-Lewis. I just want him to know that there is another approach that he needs to consider and hopefully comment on.
I have already said that I don't like the conventional models because they failed, which Wren-Lewis won't come out and admit. I like Godley's modeling because it got the EMU and the GFC correct. That's good enough for me.
I am never going to actually use any economics models at all since I am not an economist, and it would not be a good use of my time. I am interested in economics as a policy science, and I am going to listen to the conclusions and recommendations of people that got major events right and not listen to those who missed these events and can't explain why.
vimothy, is it your opinion that Godley has fooled himself into believing his approach provides something meaningfully different from conventional models? I'm only 1.5 chapters into the book, so I can't comment on much yet, except that he has made the assertion that his approach is a radical departure from the mainstream.
Although the models he is beginning to describe are slowly broaching the post-Keynesian understanding of endogenous money and the role of banks in debt creation. But it is your opinion that this adds nothing to the mainstream understanding, or is even wrong, right?
Whatever Godley-Lavoie provides that is different, it is not stock-flow consistent models, since these are already widely used.
Tom suggsets that Wren-Lewis ought to read Godley-Lavoie. It's a good textbook, but I'd still like to know why, in Tom's opinion, Wren-Lewis ought to read it, if indeed he should.
Tom,
Good comment over there, btw looks like you may have sicced the Major on Wren-Lewis...... gets back to Roger's point wrt Martin Wolf and Wolf's not crediting folks who have already published on this in the past and maybe Wolf is ripping them off...
If folks would credit others who have looked into this in the past, maybe they would be a bit more bold in their assertions as they would not appear as "alone" in their assertions...
resp
vimothy, because Wren-Lewis is still clueless about what's happened and Godley got it right. Maybe he should like at Godley's approach. Moreover, he is basically saying that heterodox economists should stop throwing rocks and work within the mainstream program.
Let's say that "predicting the financial crisis" is the standard. Then we have mainstream, Marxist, post Keynesian, and Austrian economists with a claim of success. If we take them all at face value, we're not really any closer to selecting useful frameworks.
Are MMTers looking seriously at Austrian economics? No. Are Austrians looking seriously at PKE? No. Are either looking seriously at neoclassical econ? Not a chance.
Good economics is better than bad economics--no one would argue wth that. But trusims are not useful in practice, and things that are useful in practice is precisely what's needed.
vimothy, did you see J K Galbraith's Who are these economists anyway? He shows who predicted it and how closely. Godley was closest to the target and provided a clear rationale. For some of the others, it was "a broken clock is right twice a day."
I read Galbraith's paper. I didn't think that he was particularly fair: the set of people who "got it right" look suspicously like the set of people who are friends and allies of Professer Galbriath.
Bezemer's paper was much more balanced. Even he didn't get everyone. For example, I used to read a guy called Doug Nolan who charted the whole thing from years back. He's basically an Austrian who's a bit obssessed with credit markets.
Noland, that should read.
I used to read Noland until I realized he is another nut case who doesn't understand the difference between sovereign and private credit/debt.
Dirk Bezemer is very good. He is pretty much on the same page as MMT.
BTW, vimothy, another reason I keep mentioning Godley Wren-Lewis is that Godley is probably the least controversial. I really would like see Wren-Lewis do some research and respond. That would get the ball in play.
I admit that I'd be interested to see what Wren-Lewis thinks of Godley's approach.
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