Friday, January 20, 2012

Raising Keynes

That's the title of yesterday's show on The Exchange, featuring Russ Roberts (George Mason University, EconTalk, EconStories) and Jared Bernstein (Center on Budget and Policy Priorities, former Obama adviser, econ blogger).

I can't help but disagree with Russ, and agree with Jared, on practically everything. Political philosophies often influence what subjects an economist studies, what data he (or she) examines, how they evaluate the data, and how strong the results need to be before they are convinced.

But there is an underlying reality, and it's not hard to see. Economists have gathered plenty of macroeconomic data, and have created sensible models which explain that data. New Keynesian models, in particular, work well. So well, in fact, that many high-profile economists who are branded as anti-Keynesians by the media rely on Keynesian reasoning to make their arguments.

Sticky prices, FTW.

In this case, Russ Roberts' argument that economics is just a bunch of philosophy, because the world is too complicated to understand, is simply a cop-out. Though I have to give him credit for being one of the more civil non-Keynesians around.

[Sort of cross-posted at Free Keene.]

An earlier broadcast of The Exchange, The 2012 New Hampshire Economy, is also worth a listen. In general, The Exchange is excellent.

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