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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?


  • David Colander



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.

Suggested Citation

  • David Colander, 2009. "How Did Macro Theory Get So Far off Track, and what Can Heterodox Macroeconomists Do to Get it Back On Track?," Middlebury College Working Paper Series 0911, Middlebury College, Department of Economics.
  • Handle: RePEc:mdl:mdlpap:0911

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    References listed on IDEAS

    1. Masanao Aoki, "undated". "Reconstructing Macroeconomics: A Perspective from Statistical Physics and Combinatorial Stochastic Processes," UCLA Economics Online Papers 390, UCLA Department of Economics.
    2. David Colander, 2004. "Economics as an Ideologically Challenged Science," Middlebury College Working Paper Series 0411, Middlebury College, Department of Economics.
    3. Colander, David, 2009. "What Was “It” That Robbins Was Defining?," Journal of the History of Economic Thought, Cambridge University Press, vol. 31(04), pages 437-448, December.
    4. Thomas J. Sargent, 2008. "Evolution and Intelligent Design," American Economic Review, American Economic Association, vol. 98(1), pages 5-37, March.
    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 236-240, May.
    6. V. V. Chari & Patrick J. Kehoe, 2006. "Modern Macroeconomics in Practice: How Theory Is Shaping Policy," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 3-28, Fall.
    7. David Colander, 2003. "Post Walrasian Macroeconomics and Heterodoxy : Thinking Outside the Heterodox Box," International Journal of Political Economy, Taylor & Francis Journals, vol. 33(2), pages 68-81.
    8. 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.
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    Cited by:

    1. J. E. King, 2012. "Post Keynesians and Others," Review of Political Economy, Taylor & Francis Journals, vol. 24(2), pages 305-319, April.
    2. Galbács, Péter, 2017. "Max Weber és a modern makroökonómia újraértelmezése. Elméleti keret a kortárs makroökonómia módszertani elemzéséhez
      [Max Weber and reinterpretation of modern macroeconomics. A theoretical framework
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 285-304.
    3. 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 (IfW), vol. 3, pages 1-21.
    4. 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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