Who Were the Sea Peoples?

I am trying to make a summary table for teaching macroeconomics. This is simplified, of course, but useful still, I hope: Classical Economics Keynesian Economics Say’s Law Always holds. Only holds when leakages do not exceed injections. Unemployment High unemployment is a structural problem. High unemployment can come from insufficient aggregate demand. Equilibrium Markets equilibrate quickly. Markets may equilibrate slowly. In response to a supply or demand change… A price change will produce a stable equilibrium. The other curve may shift, producing a cascade of changes. In response to a recession… Let the market work things out. The government should engage in stimulus spending. Expectations Market actors' expectations rapidly converge towards a stable equilibrium. One group of market actors' expectations may affect another g...

In Excel, posted to GitHub . Right now I have: A real growth vs. nominal growth vs. inflation spreadsheet A Keynesian Cross spreadsheet; and A Production Possibility Frontier spreadsheet. All of them are built on a minimal data entry paradigm; for instance, for the Keynesian Cross, you only need enter autonomous consumption, marginal propensity to consume, and intended investment, and the whole kit and caboodle recalculates from there. For the PPF, you just enter a maximum number of units, and everything recalculates: great for showing a collapsing or expanding PPF.

They are abstractions that highlight an aspect of the thing being modeled. That is why I deny that, by making a model of a recession in which "recessions are not about output and employment and saving and investment and borrowing and lending and interest rates and time and uncertainty... the only essential things are a decline in monetary exchange caused by an excess demand for the medium of exchange," Nick Rowe has shown that in real recessions, those are the only essential things. For instance, what about the proposition that "The Ptolemaic model of the solar system proves that it is not about rock-and-ice-and-gas planets orbiting a giant plasma orb: The only essential thing is pure circular movement"? But perhaps the problem there is that that is not a good model. So let's say we get a better one: Newton's. Now we have a planet as a point mass, orbiting the Sun, another point mass. Is this the "essence" of the solar system? That d...

On my fourth round of teaching macroeconomics, I am really able to tie much of the course together around the theme of "upholders of Say's Law" versus "Keynesians" (with "Keynesians" acting as a synecdoche for "all general glut theorists"). For instance, I was just teaching the chapter of our text on unemployment. When we discussed structural unemployment, I told the class about how the general glut debate initially launched in the wake of the Napoleonic Wars. "The defenders of Say's Law were not idiots: they saw that there were idle resources. But their explanation was that after 20 years of fighting, the European economy was structured around war: it would take time to change factories for making cannons into factories for making sweaters." And then I explained how a similar structural explanation was offered for the recent housing-led downturn. And I noted that the Keynesians needn't deny that these structural imbala...

I mentioned Chris House's model of science in a previous post . But now I want to comment on a different aspect of its oddity. (And my goal here is not to pick on House, but on the view of science he has presented, because I think it is too common.) If you recall, House's model is this: The scientific method goes something like this:  Observation Formation of hypotheses Testing/evaluation Repeat  If you can follow these steps then anything (even economics! even macroeconomics!) can be studied scientifically.  When economics is at its best it truly is a science.  The aspect I wish to point out in this post is that ever achieving any success at explaining anything plays no part, for House, on whether any endeavor is scientific. Want to do "scientific" astrology? * Observe that the planets, moon, and sun move around in the sky relative to the "fixed stars." * Form an hypothesis: "When the moon is in the seventh house / And Jupiter ali...

"it sometimes proves difficult to trace... theoretical conflicts to assumptions which have been explicitly stated. This is partly because we habitually concentrate on making those assumptions explicit which specify the relationships between the variables actually appearing in the model. The immediately antecedent stage in model-construction, i.e., the selection of aggregates, is often the stage where implicit theorizing enters in. "The behavioral assumptions underlying a particular mode of aggregation are, however, just as important as the behavioral relationships assumed to hold between the variables defined." -- Leijonhufvud, On Keynesian Economics and the Economics of Keynes , p. 38-39

Perhaps they would have worked against the Wermacht as well? Noahopinion details an interesting debate between Robert Waldmann and David Glasner. What I find most fascinating is that neither of them seems to consider the true state of affairs: there is no single, simple truth about whether or not monetary policy works at the zero lower bound. It may have worked in Ruritania in 1968 and utterly fail in Strackenz in 1988. Why? Well, for one thing, expectations are a key factor in all economic processes. People learn, and on the basis of their learning form new and different expectations than they had before. Faced with those new expectations, a policy that worked perfectly well in one time and place may fail utterly in another. The social sciences really are different than the physical sciences.

I'm reviewing Tyler Beck Goodspeed's book for The Review of Political Econom y, and... boy, I think this is going to be fun! Some initial quotes: "since the merger of Irving Fisherwith Walrasian general equilibrium, by Robert Lucas and the 'New Classicals,' all mainstream schools of macroeconomic thought... have adhered to a Walrasian approach" (p. 2). "not only did Keynes and Hayek both adhere to the Wicksellian approach, but also... the Wicksell 'connection' was, as a result, responsible for a fundamental convergence of their respective theories of money, capital, and the business cycle during the course of the 1930s" (p. 3) "Money, therefore, is intimately related to the second element of the Wicksell connection, namely, the identification of intertemporal coordination as the central problem in macroeconomics" (p. 6). ( As I noted .) "Critical to the Wicksellian approach, therefore, is the notion that producers, c...

Saltwater: If we just keep injecting glue everywhere the cards meet, we can keep building higher! Freshwater: Those cards blowing around all over the place? That's progress!

it can be very nice. This semester, I happen to be teaching both economic history and macroeconomics. In economic history, I was explaining to my class how dramatic was the transition between medieval society, were "prices" were set largely by tradition, and modern society, where they are set by supply and demand on a market. The medieval guild worker, for instance, had a wage that he "knew" that someone in his position "ought" to get, and that would enable him to live the life someone in his station in society and place in the great chain of being was entitled to live. Then, in macro, I was talking about sticky prices, and I suddenly realized that a major cause of sticky prices is that the medieval mindset was not totally obliterated by the onset of the market mindset. (Note: I am not saying it should have been! I'm inclined to think it is not even possible to eliminate these "atavistic" attitudes: they are the foundation of what has b...

Murray Rothbard never cared if an argument he offered was sound, but only about whether it seemed to make his opponent look stupid. Consider, for instance, his "reductio" of the Keynesian multiplier: Social Income = Income of (insert name of any person, say the reader) + Income of everyone else. Let us use symbols: Social income = Y Income of the Reader = R Income of everyone else = V We find that V is a completely stable function of Y. Plot the two on coordinates, and we find historical one-to-one correspondence between them. It is a tremendously stable function, far more stable than the “consumption function.” On the other hand, plot R against Y. Here we find, instead of perfect correlation, only the remotest of connections between the fluctuating income of the reader of these lines and the social income. Therefore, this reader’s income is the active, volatile, uncertain element in the social income, while everyone else’s income is passive, stable, determined by ...

Imagine that, over the past 200 years, there have been a bunch of meteorologists studying the weather. What has happened, though, is that one of them, living in Florida, has focused on thunderstorms. He came up with a pretty good model of thunderstorms, but then announced, "The weather is made up of a series of thunderstorms: to be safe, people need to install lots of lightening rods everywhere, and very good drainage so that streets and creeks don't flood." Another fellow lived in Oklahoma, and he focused on tornadoes. He developed a pretty good model of tornadoes, and then declared. "The weather is characterized by periods of calm followed by tornadoes: to remain safe, people need good solid basements and very sturdy wooden shutters." A third meteorologist lived in California. His studies focused on seasonal variations in rain. He developed a good model of those, and then professed that "Human weather problems can be solved, if only people find ways ...