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The History of Macroeconomics Reconsidered

Grant number: 17/16099-7
Support type:Scholarships in Brazil - Post-Doctorate
Effective date (Start): January 01, 2018
Effective date (End): November 30, 2019
Field of knowledge:Applied Social Sciences - Economics
Principal Investigator:Pedro Garcia Duarte
Grantee:Matthieu Marc Julien Renault
Home Institution: Faculdade de Economia, Administração e Contabilidade (FEA). Universidade de São Paulo (USP). São Paulo , SP, Brazil

Abstract

The traditional representation of the evolution of macroeconomics is that in the 1970s Robert Lucas and the new classical macroeconomists reconfigured the field and buried the "Keynesian consensus" that had dominated macroeconomics since the 1940s. This implied that a more liberal (pro-free market) approach came to dominate the area, coinciding with the search for the microfoundations. This is an account based almost exclusively on theoretical concerns, ignoring the role of expertise and the political dimension of policymaking, and the rise of econometric methods to the very core of macroeconomics. Edmond Malinvaud is an exemplar of how expertise, econometric methods and theoretical innovations in disequilibrium macroeconomics generate a rather complex evolution of macroeconomics in the postwar period.For the postdoc period two projects will be developed. The first deals with the view, in the standard narrative, that he new Keynesian macroeconomics replaced disequilibrium theory because it offered a better rationalization (or at least, better microfoundations) of the Keynesian theory. There are clear problems here. First, from a simple chronological point of view, disequilibrium theory cannot be presented as a predecessor of new Keynesian macro, since most of its models were published in the mid-1970s, simultaneously with the first new Keynesian models. Second, disequilibrium theory did not disappear after the rise of new Keynesian macro, but continued to exist throughout the 1980s, entering in a new expansionary phase of its research program with the development of more dynamic models. The first project will analyze - historically and analytically - the nature of the relationship between disequilibrium and new Keynesian macroeconomics.The second research project consists on tracking and analyzing the rise and subsequent domination of DSGE models in modern macroeconomics. Starting from the mid-1990s, the allegedly irreconcilable opposition between Real Business Cycle and new Keynesians macroeconomists suddenly decreased and macroeconomics seemed to enter in a new era of consensus that was labelled as the "New Neoclassical Synthesis". Like for the "old synthesis", the "New Neoclassical Synthesis" rests on a compromise rather than on a consensus because the opposition between macroeconomists approaches is neither resolved nor overtaken through DSGE models. This project will develop two main points. First, it is crucial to identify the different steps that conducted to the new consensus as well as who were the macroeconomists responsible for the introduction of New Keynesian hypotheses in the RBC model. Then, we need to identify the places of expertise in which the rapprochement between New Classical and New Keynesian macroeconomists occurred, in order to determine the practical problems they had to tackle and led them to converge.