DeLong: Economics in Crisis: "
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Brad DeLong on what is (and should be ) taught in economics programs:
Economics in Crisis, by J. Bradford DeLong, Commentary, Project Syndicate: The most interesting moment at a recent conference held in Bretton Woods, New Hampshire ... came when Financial Times columnist Martin Wolf quizzed ... Larry Summers... "[Doesn’t] what has happened in the past few years,” Wolf asked, “simply suggest that [academic] economists did not understand what was going on?”
Here is the most interesting part of Summers’ long answer: “There is a lot in [Walter] Bagehot that is about the crisis we just went through. There is more in [Hyman] Minsky, and perhaps more still in [Charles] Kindleberger.” That may sound obscure to a non-economist, but it was a devastating indictment. ... Summers then enlarged his answer to include living economists: “Eichengreen, Akerlof, Shiller, many, many others.” ...
For Summers, the problem is that there is so much that is “distracting, confusing, and problem-denying in…the first year course in most PhD programs.” As a result, even though “economics knows a fair amount,” it “has forgotten a fair amount that is relevant, and it has been distracted by an enormous amount.”
I think that Summers’ judgments are fair and correct. ... “We need to change our hiring patterns,” I expected to hear economics departments around the world say in the wake of the crisis.
The fact is that we need fewer efficient-markets theorists and more people who work on microstructure, limits to arbitrage, and cognitive biases. We need fewer equilibrium business-cycle theorists and more old-fashioned Keynesians and monetarists. We need more monetary historians and historians of economic thought and fewer model-builders. We need more Eichengreens, Shillers, Akerlofs, Reinharts, and Rogoffs – not to mention a Kindleberger, Minsky, or Bagehot.
Yet that is not what economics departments are saying nowadays. ...
[My response to Summers' talk was a post called Re-Kindleberger.]
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