Like Milton Friedman, Mike Friedman and Bob Friedman
As you may have heard, Mike Woodford and Bob Hall won the 2026 Nobel prize.
This is a great prize, honoring two superb and highly influential economists.
What their work has to do with Keynesian stabilization is more of a head scratcher. This prize lives a lot more in the shadow of Milton Friedman and Bob Lucas than Keynes.
Hall’s most famous paper (my review here) was a brilliant extension and test of Milton Friedman’s permanent income model of consumption, which undercut the whole Keynesian fiscal stimulus business. Hall’s approach is also the cornerstone of all subsequent macroeconomics. Keynesian economics thinks about each year in isolation. In modern economics people think about the future in deciding what to do today. That is also a central part in Bob Lucas and Ed Prescott’s justly famous Nobel contributions. And Woodford.
Woodford’s monumental work (Interest and Prices is a capstone) was centrally about monetary policy, what the Fed can and should do. Keynesian economics famously said monetary policy is ineffective so the government should pursue fiscal stimulus. There isn’t much fiscal stimulus in Woodford’s book, and what little there is in subsequent work has very little to do with the Keynesian story.
A Great Nobel - by John H. Cochrane - The Grumpy Economist
Btc will make a great headstone for monetarism. Last refuge of the scoundrel.
No comments:
Post a Comment