I got 20,000 words written, but now I want to start over. Current thoughts:
1. A concise, selective history of macroeconomic thought from 1960-2012. Not a survey or scholarly reference work. By history of thought, I mean to capture the path-dependence of the ideas. Starting in 1960 lets me skip over a whole lot of the discussion that preceded 1960. “What did Keynes mean?” is a well-squeezed orange that I do not want to touch.
2. Organized in two dimensions (three if you count time). One dimension is by school of thought, covering: classical, 60’s Keynesian, Friedmanite, 70’s textbook, general disequilibrium (Clower, Barro-Grossman) New Classical (rational expectations, real business cycle), New Keynesian (rational expectations with sticky wages/prices), Minsky, PSST.
3. The other dimension is by major issue.
Unused Resources–are they a temporary aberration that markets will quickly eliminate? a manifestation of effective demand failure? other?
Wage stickiness–are wages sticky in real terms? in nominal terms? How central is this to explaining macroeconomic phenomena?
Macroeconomic data–is it well behaved? If not, what are the important issues: path dependence? phase changes/regime shifts? structural change? singular events (policy shocks, exogenous shocks)? Can we cut through the causal density in order to test theories?
Fiscal policy–is it an important tool for macroeconomic stabilization?
interest rates–one interest rate or multiple interest rate?, real vs. nominal, ex ante vs. ex post
Money–how unique is it? how do substitution possibilities in terms of assets and transaction media affect the link between central bank actions and the economy?
Credit–do we need to understand credit markets, including credit rationing and changes in risk tolerance, in order to understand macroeconomic behavior?
I agree that time and schools of thought are a good way to organize a macro book. The only macro book that I felt really enhanced my understanding was Snowdon and Vane’s “Modern Macroeconomics,” and it is organized along history of thought lines.
Snowdon and Vane aim mostly to give an exposition of what each school believes, but a critical “history of thought” macro text, one that opines and undermines and adjudicates between schools, would be valuable, in my opinion.
I’m with Eli – except I’d suggest a narrative structure that emphasizes the ‘drama’ of the pendulum swings. Or perhaps ‘a stitch in time saves nine’ or ‘extraordinary measure to resuscitate’.
My impression is that competing schools make a lot of progress and gain a good amount of popularity for a while as they handle the last mystery, then kind of exhaust themselves as they flounder trying to resolve the latest puzzle, and then the competing schools takes advantage of the situation and declares ‘the death of the X school’. But then, someone does something new and clever and X-school is now neo-X is saved and revived and still a totally valid explanation.
These ‘saving graces’ contrivances often introduce unfalsifiables (maybe without identified good microfoundations) or the equivalents of extra variable factors or degrees of freedom to which you can fit any curve. ‘Well, it’s short-term stickiness’ or ‘the demand curve slopes the other way’.
The end result is that these would go far in explaining how we got into the entrenched and intractable situation in which we now find ourselves and why we lack clear paths to resolution.
I thought the July 14 outline was more provocative and agree with ED & Handle comments – focusing on what’s wrong with each twist and turn and especially the fundamental flaws that reappear with each neo-this and new-that.
ED mentions Snowdon & Vane, this also overlaps a bit with Todd Knoop’s book on business cycles, which focuses at least half on post-JMK history of thought although he concludes from a new Keynesian perspective.
Who is your intended audience/reader for this work, Arnold? Are you intending to inform the least economic literate, the economic layman, or the so-called experts?
I am trying to change the terms of discussion for macro. Less model-oriented and more open-ended. Whoever is receptive to that is welcome to read it
I’m certainly open to it, and will be reading it when you’re finished. Your, “Patterns of Sustainable Specialization and Trade” (PSST) is the most compelling macro concept I’ve seen in quite a while.