Lars P. Syll — De Vroey’s Chicago style History of Macroeconomics

Preferring theory to reality. Is it science or ideology? Looks like ideology to me, but I'm only a philosopher and logician rather than an economist. You decide.

Lars P. Syll’s Blog
De Vroey’s Chicago style History of Macroeconomics
Lars P. Syll | Professor, Malmo University

Lars P. Syll — David Andolfatto and the Chicago dismissal of ‘involuntary unemployment’

Roger Farmer schools David Andolfatto on some history of economics. 

The dismissal of ‘involuntary unemployment’ from the lexicon of the modern economist was introduced as part of a deliberate attack on Keynesian economics. It is time to roll back that attack. As I have shown here, ‘involuntary’ unemployment is a useful way of distinguishing unemployment that is part of a social optimum, from unemployment that is not.

Ten dogs, nine bones.

It doesn't matter how much job seekers are willing to reduce their offers if there are too few bids for workers. Some workers will be unemployed "involuntarily," the veil of Pareto optimality notwithstanding. And Keynes explained why there are too few jobs for those willing and able to work regardless of wage flexibility.

Lars P. Syll’s Blog
David Andolfatto and the Chicago dismissal of ‘involuntary unemployment’
Lars P. Syll | Professor, Malmo University

Lars P. Syll — Arrow on flawed markets, involuntary unemployment and rational expectations

Quote by Kenneth Arrow on the good society, involuntary unemployment and rational expectations that you may wish to have for future reference.

I think the idea that a society has to be responsible for all of its citizens, those who do well and those who do not, is really a precondition of a good society.

Lars P. Syll’s Blog

Arrow on flawed markets, involuntary unemployment and rational expectations
Lars P. Syll | Professor, Malmo University

Lars P. Syll — Keynes vs. ‘New Keynesians’ on unemployment

The final court of appeal for macroeconomic models is the real world, and as long as no convincing justification is put forward for how the inferential bridging de facto is made, macroeconomic modelbuilding is little more than “hand waving” that give us rather little warrant for making inductive inferences from models to real world target systems. If substantive questions about the real world are being posed, it is the formalistic-mathematical representations utilized to analyze them that have to match reality, not the other way around.

To Keynes this was self-evident. But obviously not so to ‘New Keynesians’.

Keynes vs. ‘New Keynesians’ on unemployment
Lars P. Syll | Professor, Malmo University

Lars P. Syll — Why DSGE is such a spectacularly useless waste of time

Noah Smith has a nice piece up today on what he considers the most “damning critique of DSGE:”…

 Although I think the unsellability of DSGE — private-sector firms do not pay lots of money to use DSGE models — is a strong argument against DSGE, it is not a killing magic bullet or the most damning critique of it….

Why DSGE is such a spectacularly useless waste of timeLars P. Syll | Professor, Malmo University

John Aziz — The “Unemployment Is Voluntary” Myth

Is the reason why unemployment is elevated that millions of Americans are choosing not to work because of cushy government welfare provisions?

After all, welfare payments as a percentage of GDP and unemployment have risen in tandem...

Well, if labour was truly slacking off then we would expect to see a shortage of labour. But instead we see an elevated level of applicants per job openings...

This means that there are not enough job openings in the economy even for the number of current jobseekers, let alone the discouraged workers and disabled individuals who are claiming welfare.

azizonomics — Economics for the jilted generation…
The “Unemployment Is Voluntary” Myth
John Aziz

Lars Syll — New Keynesians, price stickiness and involuntary unemployment (wonkish)

Very clear explanation of J. M. Keynes in The General Theory v. New Keynesianism. It's not really wonky and no math, so if you aren't totally clear on this important issue, take a look. 

In my view, it's a likely factor in shaping the Obama administration's lackluster push for an initial stimulus package to adequately stimulate effective demand to address involuntary unemployment. Christina Romer seems to have gotten it, with her 1.2T proposal whittled from her original estimate of 1.5T.

But Larry Summers, not so much. Summers complained about the politics of it as the reason for his smaller package, but he was paid as chief economic advisor to the president, not as a political strategist. Was he thinking that depressing the real wage would address unemployment "more cost-effectively"? Apologies to Professor Summers if I am imputing analysis and motives that are incorrect, and which he never profess in terms of setting policy, but it looks plausible to me. Otherwise why propose a stim that would be too small, with little chance for getting a second shot?

Lars P. Syll's Blog
New Keynesians, price stickiness and involuntary unemployment (wonkish)
Lars P. Syll | Professor, Malmo University

Bill Mitchell — Keynes and the Classics – Part 1

I am now using Friday’s blog space to provide draft versions of the Modern Monetary Theory textbook that I am writing with my colleague and friend Randy Wray. We expect to complete the text by the end of this year. Comments are always welcome. Remember this is a textbook aimed at undergraduate students and so the writing will be different from my usual blog free-for-all. Note also that the text I post is just the work I am doing by way of the first draft so the material posted will not represent the complete text. Further it will change once the two of us have edited it.



Chapter 11

11.1 Introduction and Aims

In Chapter 10, we discussed issues relating to labour market measurement. In this Chapter we will focus on theoretical concepts that underpin the measurement of economic activity in the labour market and the broader economy.

The Chapter has five main aims:

• To explain why mass unemployment arises and how it can be resolved.
• To develop the concept of full employment.
•  To consider the relationship between unemployment and inflation – the so-called Phillips Curve.
• To develop a buffer stock framework for macroeconomic management (full employment and price stability) and compare and contrast the use of unemployment and employment as buffer stocks in this context.
• To more fully explore the concept of a Job Guarantee (employment buffer stock) approach to macroeconomic management.

[THIS JUST REPEATS THE INTRODUCTION FROM LAST WEEK TO SET THE CHAPTER MAP OUT - TODAY WE MOVE ON TO DISCUSS THE CONCEPT OF FULL EMPLOYMENT - LIKE ALL BOOK DRAFTING EXERCISES THE ORDER OF ARGUMENT EVOLVES AS ONE SETS ABOUT MAKING IT. IN THIS CASE, WE ALSO HAVE TO WORRY ABOUT PEDAGOGY AND THAT ADDS ANOTHER DIMENSION - SO THINGS MIGHT BE A LITTLE DIFFERENT ONCE THE FINAL DRAFT IS SET]

11.5 Involuntary unemployment

Bill Mitchell — billy blog
Keynes and the Classics – Part 1
Bill Mitchell