Thursday, March 29, 2007

The Changing Face of Economics

This is David Colander in his intro to The Making of an Economist, Redux:

"(...) looking at the profession today, I am convinced that it is quite different than it was in the mid-1980s, when Arjo and I first sat over drinks and lamented the state of the profession. The commitment to theorems and proofs has declined, and there is a much stronger empirical branch of economics. Natural experiments and instrumental variables are now central to an economist’s training. Behavioral economics has advanced enormously, and the macro that is done is fundamentally different from the macro that was done in the 1980s; advanced time-series statistics, such as cointegrated structural VARs and calibration, are commonplace, where they were hardly known before. What were taken as requirements of research in the 1980s are no longer requirements in the 2000s; the holy trinity of greed, equilibrium, and rationality has been replaced by a looser trilogy of purposeful behavior, sustainability, and enlightened self-interest. I could extend the list enormously, but there is no need to do that here. My point is simply that economics has changed and will continue to change, making it impossible to call the existing profession neoclassical any longer."

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