Academic Macro Economics Just Keeps Getting Trickier

In 1988, I thought that the Brock-Mirman one sector Growth Model was nasty stuff but now look at Exhibit A and Exhibit B. Progress not regress.

I will let you decide if this elegant model resembles the modern economy. Do you see Google within it? Do you see skill formation? Do you see Diet Coke or cell phones? Now, I agree that we have to start with something tractable. But, at the tender age of 43 --- I'm still learning how economists play our game. We have reality and we have our models, our goal is to construct models in order to explain and predict reality. To make progress, we need to write down models that we can solve and that somehow strip down reality into a subset of stylized facts that the model will explain.

Exhibit A above tells a complex loose story about the non-stationarity of our modern economy. I couldn't really tell what Axel believes is the research program. He dismissed what others are doing without laying out a positive vision.

I am trying to clear out the time to carefully read the Hansen/Sargent stuff on robustness. Even when I was a dumb graduate student, I smelled that rational expectations was imposing a "communism" of everyone agreeing on the unique "true" probability model. To their credit, these guys are introducing some uncertainty into the minds of the decision makers. This resembles what Weitzman has been talking about in terms of "fat tail" climate risk. I know that I do not know many things. This knowledge has helped me to rise in our profession!