Thursday, September 24, 2009

Economists at War: A Macroeconomics Soap Opera

The macroeconomics blogosphere is daily theater few dramas can match. The world’s leading economists are engaged in a great debate, often going for the jugular, asserting who is right and who is wrong in the choice of intellectual framework (Keynesian, classical, behavioral, Austrian, hybrid) that best explains the "Great Recession," and how to resolve the financial crisis and its aftermath.

Those at war include leading professors at Harvard, Columbia, Princeton, Chicago, Berkeley, Stanford, George Mason, Oxford (apologies to those not specifically listed), along with numerous commentators in business and the financial media. There is a strong tone of partisanship in the debate.

Among the issues: How many jobs could a stimulus stimulate...? Harvard’s Robert Barro says none, Stanford’s John Taylor says some, Princeton’s Paul Krugman, Columbia’s Joe Stiglitz, and Berkeley’s Christina Romer (head of the Council of Economic Advisers) say a lot. All use data and argument to buttress their claims.

What is the proper mix of fiscal and monetary policies? Are today’s deficits the cure or tomorrow’s problem?

Considering the following proposition. Have the students completing intermediate macroeconomics from any of the combatants take their final exams from any of their professor’s antagonists. The results should be very interesting.

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