Frank Diebold reports,
I am sad to report that Lawrence R. Klein has passed away. He was in many respects the father of modern econometrics and empirical macroeconomics; indeed his 1980 Nobel Prize citation was “for the creation of econometric models and their application to the analysis of economic fluctuations and economic policies.”
Pointer from Tyler Cowen.
In my macro book, I talk about the 1960s as The Little Moderation, in order to stress its similarity to the Great Moderation of 1986-2007. However, another term might The Forgotten Sixties. Some of what has been forgotten is the excitement that was generated by macroeconometrics. Economists who made significant contributions in this area were awarded several of the early Nobel Prizes–Frisch and Tinbergen (1969, the first year of the Nobel in economics), Koopmans (1975), and Klein (1980). Yet I will venture to guess that one cannot find a single graduate school syllabus today that mentions the work of those laureates.
The same holds for the leading policy makers of the era. Who under the age of 50 has heard of Walter Heller or Otto Eckstein? I assume that Alan Greenspan will be long remembered and will continue to receive credit for the presiding over The Great Moderation (his culpability for the financial crisis is still being assessed). During the Little Moderation, the Federal Reserve received no credit. The Fed Chairman was William McChesney Martin, who today is remembered only for the “punch bowl” metaphor, which he evidently borrowed.* In the 1960s, everybody attributed good economic performance to fiscal policy, not to the Fed.
The macroeconometricians and the Kennedy-Johnson economists were at the top of the economics profession in the 1960s. As the Great Stagflation gathered force in the 1970s, they lost all of their prestige. Hence, the Forgotten Sixties.
*In October of 1955, he said,
The Federal Reserve, as one writer put it, is in the position of the chaperone who has ordered the punch bowl removed just as the party was warming up.
Pointer from Timothy Taylor.