the state of economics

[Dave Backus]

You may have seen a few articles recently lamenting the state of
macroeconomics and finance -- if we knew what we were doing, how did
we end up in such a mess? Apparently we're all knuckleheads! To be
honest, I think these articles are a good thing. They raise a lot of
questions that are interesting to work on -- the NYU book from last
spring being a good example. And publicity like this will encourage
more smart students to join the fun. But it's also true that
Krugman's piece, in particular, draws an incredibly inaccurate picture
of the field. That's pretty close to the median opinion among
academic macroeconomists. Paul's an incredibly smart guy, but he's
chosen to ignore 20 years of interesting work. Maybe the Times gig
takes up all his time.

Rather than write my own summary, here are some links if you'd like to
follow up. Some are more technical than others. I've put the most
readable ones at the top. If you have questions about any of this,
let me know. I'd be happy to follow up, preferably over a beer.

One plug: NYU is now probably the leading source of new PhDs in
macroeconomics. We have an extremely strong group. And we're not bad
in finance either.

Links about the failure of macroeconomics and finance:
* http://www.economist.com/opinion/displaystory.cfm?story_id=14031376
(see also two related links)
* http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html

Links by economists (several via Mankiw's blog):
* http://macroblog.typepad.com/macroblog/2009/09/economists-got-it-wrong-but-why.html
* http://www.econ.umn.edu/~nkocher/stuff.pdf
* http://faculty.chicagobooth.edu/john.cochrane/research/Papers/krugman_response.doc