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How Did Macro Theory Get So Far off Track, and what Can Heterodox Macroeconomists Do to Get it Back On Track?

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  • David Colander

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Abstract

This paper argues that the ideas that win out in economics are not necessarily those that a representative researcher would choose, but are rather the emergent result of the competition of ideas in which system replicator dynamics dominate. This means that those ideas that fit the analytic technology available to researchers at the time dominate, while “better” ideas that do not offer advancement to researchers lose out. This paper spells out that view. It differentiates a consumer’s understanding of theory from a producer’s understanding of theory, and argues that a consumer’s understanding of theory is often better suited to applied policy than is a producer’s understanding of theory. Because the replicator dynamics of the economics profession does not reward people for acquiring a consumer’s understanding of theory, that understanding is often neglected. Heterodox economists often have a better consumer’s understanding of theory than do mainstream economists but because they do not prepare students to be successful in economic institutional environment, their views do not receive the hearing they should in the profession. The paper offers a number of suggestions for heterodox European macro economists for competing and shaping the economic institutional environment.

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File URL: http://www.middlebury.edu/services/econ/repec/mdl/ancoec/0911.pdf
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Bibliographic Info

Paper provided by Middlebury College, Department of Economics in its series Middlebury College Working Paper Series with number 0911.

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Length: 21 pages
Date of creation: Aug 2009
Date of revision:
Handle: RePEc:mdl:mdlpap:0911

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  1. Patrick Kehoe & Varadarajan V. Chari, 2006. "Modern Macroeconomics in Practice: How Theory is Shaping Policy," NBER Working Papers 12476, National Bureau of Economic Research, Inc.
  2. David COlander, 2009. "What Was “It” that Robbins Was Defining?," Middlebury College Working Paper Series 0914, Middlebury College, Department of Economics.
  3. Thomas J Sargent, 2007. "Evolution and Intelligent Design," Levine's Bibliography 122247000000001821, UCLA Department of Economics.
  4. David Colander, 2009. "Moving Beyond the Rhetoric of Pluralism: Suggestions for an “Inside-the-Mainstream” Heterodoxy," Middlebury College Working Paper Series 0915, Middlebury College, Department of Economics.
  5. David Colander & Peter Howitt & Alan Kirman & Axel Leijonhufvud & Perry Mehrling, 2008. "Beyond DSGE Models: Toward an Empirically Based Macroeconomics," American Economic Review, American Economic Association, vol. 98(2), pages 236-40, May.
  6. David Colander, 2004. "Economics as an Ideologically Challenged Science," Middlebury College Working Paper Series 0411, Middlebury College, Department of Economics.
  7. David Colander, 2003. "Post Walrasian Macroeconomics and Heterodoxy : Thinking Outside the Heterodox Box," International Journal of Political Economy, M.E. Sharpe, Inc., vol. 33(2), pages 68-81, June.
  8. Masanao Aoki, . "Reconstructing Macroeconomics: A Perspective from Statistical Physics and Combinatorial Stochastic Processes," UCLA Economics Online Papers 390, UCLA Department of Economics.
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Cited by:
  1. Colander, David C., 2009. "Economists, incentives, judgment, and the European CVAR approach to macroeconometrics," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 3(9), pages 1-21.
  2. J. E. King, 2012. "Post Keynesians and Others," Review of Political Economy, Taylor & Francis Journals, vol. 24(2), pages 305-319, April.
  3. David Colander, 2009. "“What is so Austrian about Austrian Economics?”," Middlebury College Working Paper Series 0910, Middlebury College, Department of Economics.

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