Conversations With James Tobin And Robert Shiller On The “Yale Tradition” In Macroeconomics

Every graduate school has its own distinctive history that makes it unique in some way, but every graduate school is also part of the broader economics profession and reflects the currents in the profession. The following dialogue focuses on the question: Is it useful to distinguish a “Yale school of macroeconomics” from other schools of economics? The idea for this dialogue came from William Barnett in a discussion with Bob Shiller. Bill suggested to Bob some names of individuals who might conduct the “dialogue” and I was selected from that list. I happily agreed because, from my knowledge of the writings of the Yale faculty, I felt that there was a uniformity of ideas with which I was sympathetic, and which might deserve to be called a “Yale School”—a view shared with Bob Shiller.Exploring the issue further, I found that there was far less agreement on whether the macroeconomics work that currently goes on at Yale can be classified meaningfully as “the Yale school.” The objections to specifying a separate Yale school were the following: (1) The term, Yale school, had been used in the 1960's to describe Jim Tobin's position in a debate with monetarists. Some felt it would be confusing to use the Yale school classification to describe a broader set of works that are not connected to that earlier, more narrow, use. (2) Calling the work in macroeconomics currently done at Yale a “school” distinguishes it too much. The work that goes on in Yale is similar to the work that goes on in any top graduate economics program. It is not so clear how the work at Yale differs from, for example, MIT or Princeton. It would need to be more distinct to warrant calling it a “school.” (3) There is a diversity of approaches that are used at Yale, and it is not clear that they actually fit together. For example, Chris Sims's work follows from a time-series statistics tradition with influences from real-business-cycle and calibration work; Shiller's work follows from a Keynesian tradition. Fitting them together requires a bit of a stretch. (4) The degree of continuity in the Yale school over time is not as great as I had first imagined. There was little linkage at Yale from Irving Fisher to Jim Tobin; thus the historical continuity needed for specifying a Yale school does not exist. These objections are elaborated in the dialogues below. After discussing these issues with a number of Yale faculty, I decided that there probably wasn't a Yale school of economics, but that there was a Yale tradition. We also decided to have a conversation with only two individuals—Jim Tobin and Bob Shiller—because they are major figures in maintaining what I believe is a Yale tradition. The conversations were held separately, although I asked many of the same questions to both, and focused much of the conversation on the issue of whether it is useful to distinguish a Yale school. Thus, the conversations discuss the work of other individuals at Yale more than a dialogue with another focus would have, and do not cover Tobin's or Shiller's current work as much as conversations with an alternative focus would have. The results are, I believe, interesting. They provide some useful insight into both the Yale tradition and current thinking and debates in macro.