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Man and Machine in Macroeconomics

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  • Kevin Hoover

Abstract

The potted histories of macroeconomics textbooks are typically Keynes-centric. Keynes is credited with founding macroeconomics, and the central developments in the field through the early 1970s, including large-scale macroeconometric models are usually termed “Keynesian.” The story of macroeconomics is framed as support or opposition (e.g., monetarism or the new classical macroeconomics) to Keynes. The real story is more complicated and involves at least two distinct threads. Keynes was important, but perhaps more important for the detailed development of the field were the early macroeconometricians – Ragnar Frisch and Jan Tinbergen. Frisch and Tinbergen adopted physical or mechanical metaphors in which aggregate quantities are central. Keynes’s vision of macroeconomics is better described as “medical.” It is based in human psychology and individual decision-making and sees the economy as an organic system. Whereas policymakers and economic advisers in Keynes view can operate only within the economic system, Frisch and Tinbergen laid the basis for an optimal-control approach to economic policy in which the policymaker stands outside the system. Recent new classical macroeconomics has adopted an uneasy amalgam of the medical and mechanical metaphors.

Suggested Citation

  • Kevin Hoover, 2013. "Man and Machine in Macroeconomics," GREDEG Working Papers 2013-03, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
  • Handle: RePEc:gre:wpaper:2013-03
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    References listed on IDEAS

    as
    1. Lucas, Robert E, Jr, 1980. "Methods and Problems in Business Cycle Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(4), pages 696-715, November.
    2. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    3. Ronald G. Bodkin & Lawrence R. Klein & Kanta Marwah, 1991. "A History of Macroeconometric Model-Building," Books, Edward Elgar Publishing, number 51.
    4. George A. Akerlof & Robert J. Shiller, 2010. "Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism," Economics Books, Princeton University Press, edition 1, number 9163, October.
    Full references (including those not matched with items on IDEAS)

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    1. Links for 03-19-2013
      by Mark Thoma in Economist's View on 2013-03-19 05:06:00

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    More about this item

    Keywords

    macroeconomics; Keynes; Frisch; Tinbergen; Klein; macroeconometric models; macroeconomic policy;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies

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