to
About
Date: Wednesday 25 April 2018
Time: 18:00 -19:30
Speaker: John McCombie
Talk Title: 'Why there will Never be a Complete Consensus in Macroeconomics: A Tale of Group Thinking and Paradigms'
Location: Ramsden Room, St Catharine's College
An audio recording of the presentation is here:
Speaker
John McCombie is Emeritus Professor in Regional and Applied Economics, and Senior Emeritus Fellow of the Department of Land Economy. He is a Fellow of the Academy of Social Sciences and a Fellow of the Regional Studies Association. John is Director of the Cambridge Centre for Economic and Public Policy; Emeritus Fellow in Economics, Downing College; Director of Studies in Land Economy, Christ’s College, Downing College and Girton College. He was formerly a lecturer in Economics at the University of Hull and at the University of Melbourne. His interests are regional economics, post Keynesian macroeconomics, the causes of variations in national and regional growth rates, income inequality, trade and economic geography and the methodological implications for macroeconomics of the Great Financial Crisis. He is a consultant to the Asian Development Bank and the World Bank and was a Special Advisor to a House of Lords Subcommittee inquiring into the EU regional funds. He was a founding co-editor of Spatial Economic Analysis and a former editor of Regional Studies. He has recently published (with Jesus Felipe) a book entitled The Aggregate Production Function and Technical Change; ‘Not Even Wrong’. This presents a fundamental criticism of one of the central concepts of neoclassical macroeconomics. He is currently researching into the economic and philosophical issues (including Rawls’ ‘Justice as Fairness’ and the concept of ‘Just Deserts’) concerning the optimal degree of income inequality.
Talk Overview
After the acrimonious debates between the New Classical and Keynesian economists in the 1980s and 1990s, a complacent New Macroeconomic Consensus was achieved and by 2006, according to its adherents, all the major theoretical problems were deemed solved. The sub-prime crisis exposed fundamental flaws in this approach and for a time there was a return to the putatively discredited Keynesian Economics of fifty years ago. Using this as one example, this seminar looks at the broader question as to why competing schools of thought can, and have persisted, almost indefinitely in macroeconomics. This is notwithstanding the emergence of a dominant, or mainstream, approach. This contribution draws on Kuhn’s notion of the paradigm and the sociology of knowledge to understand why previous debates re-emerge and why some economists question whether there has been any meaningful progress in macroeconomics over the last thirty years. It also considers the strange case of the aggregate production function, which is at the heart of both applied and theoretical neoclassical macroeconomics. This is in spite of the fact that it is logically impossible to derive the production function from micro-foundations (the aggregation problem) and why it is always possible to obtain a near perfect statistical fit to the putative production function, although the estimates tell us nothing about the underlying economy. This raises some further important methodological issues for macroeconomics.
Please contact the seminar organisers Philip Arestis (pa267@cam.ac.uk) and Michael Kitson (m.kitson@jbs.cam.ac.uk) in the event of a query.