Must-Read: Paul Krugman likes to say that macroeconomics has done fine since 2007. And Jim Tobin's macroeconomics has. John Maynard Keynes's macroeconomics has. Walter Bagehot, Hyman Minsky, and Charlie Kindleberger's macroeconomics has done fine.
But Bagehot and Minsky influenced the then top-five American economics departments--Chicago, MIT, Harvard, Princeton, Yale--only through Kindlberger. Charlie went emeritus from MIT in 1976 and died in 1991, and MIT made a decision--a long series of repeated decisions, in fact--that there was no space on its faculty for anybody like Charlie.
When Robert Skidelsky says "macroeconomics", he means the macroeconomics of RBC and DSGE and ratex and the Great Moderation. And he is right: Alesina and Ardagna and Reinhart and Rogoff each had more influence on what policymakers and journalists thought about the effects of fiscal policy than did Paul Krugman and company, (including me). While the Federal Reserve went full-tilt into quantitative easing (but not stamped money or helicopter money), it did so in the face of considerable know-nothing opposition. And the ECB lagged far behind in terms of even understanding its mission. Why? Because Taylor, Boskin, Calomiris, Lucas, Fama, and company had almost as much impact as did Paul Krugman and company.
"Basic macro" did fine. But basic macro was not the really-existing macro that mattered:
Paul Krugman: Don't Blame Macroeconomics (Wonkish And Petty): "Robert Skidelsky... argues, quite correctly in my view, that economists have become far too inward-looking...
