Thursday, September 10, 2009

Economists and the Crisis

I suspect most of you are already aware of Paul Krugman's piece in the most recent New York Times Magazine. It is well written and is an example of why he is a popular economist as well as an accomplished one.

But you may not be aware of the wide range of comment the piece has generated in the blogosphere. I was only somewhat aware until I ran across a post in The Wall Street Journal's Realtime Economics blog.

All the ones listed are in that piece are quite good, but some of the ones that I think are especially worthy your time (something to read on Sunday after you're done with the newspaper) are these:
Scott Sumner at TheMoneyIllusion
Philip Lane at the Irish Economy blog (HT to Mark Thoma @ Economists View)
Brad DeLong at Grasping Reality with Both Hands
Andrew Samwick at Capital Gains and Games
Diane Lim Rogers at EconomistMom

The others at the WSJ link are good, too. I just found these the most engaging. As to using this information in the classroom, I think it might be overwhelming for many students. But I think it could be an interesting exercise for IB or AP classes in examining the different schools of thought in economics.

Personally, I agree with Krugman that economics has become too model-driven. I also agree that some of the research in behavioral economics is valuable when explaining and understanding things like bubbles and otherwise "irrational" behavior. But to accept that and dismiss ideas like "rational expectations" seems short-sighted. I happen to think the two are related. And that behavior that some think "irrational" comes from not understanding that the macro is made up thousands and millions of micros, each with their own set of values (institutional constraints) and goals (incentives).

Do you think your students would find these resources helpful or interesting? I look forward to your comments.

One more to add to the pile, even though it wasn't mentioned in the Wall Street Journal's blog,
Barry Eichengreen at The National Interest.

And a rebuttal by
John Cochrane at The University of Chicago

1 comment:

Julie said...

I saw Krugman's article on Friday and made it a reading assignment for the week-end. I thought it useful to create a background for those new to the study of macroeconomics.
I'm in the process of reading the responses to Krugman's points.