Originally Posted by
Fuchs
Sometimes he doesn't sound like a macroeconomist.
To my eyes, he is a Nobelist and public intellectual who has been able to use technology to engage and educate civil society in a long overdue discussion regarding economic policy (which of course impacts us all). Now if only our elected officials would follow his lead - do their job, take the time to try and understand what is going on and actually formulate & operationalize functional policy that meets the needs of the majority of their democratic constituency. 
I am going to dig into this a bit, for my own edification mainly as I am assuming much of what follows is familiar to you.
In his macroeconomic work, as I understand it, he is characterized as new-keynesian...part of a school that attempts to bridge the gap between macroeconomics and microeconomics by also examining imperfect competition (to include monopolies and oligopolies traditionally examined by microeconomists) and wage & price stickiness (using advanced models such as DSGEs - Smet-Wouters in the case of the ECB) in addition to the traditional macroeconomic concerns of national income, output, consumption, unemployment, inflation, savings, investment, international trade, international finance, etc.
- Home / Nobel Prizes / Prize in Economic Sciences / Paul Krugman - Prize Lecture: The Increasing Returns Revolution in Trade and Geography, http://www.nobelprize.org/nobel_priz...n-lecture.html
- The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2008, Paul Krugman, “for his analysis of trade patterns and location of economic activity”, http://www.nobelprize.org/nobel_priz...lguide_eco.pdf
- The Conscience of a Liberal, http://krugman.blogs.nytimes.com
- Paul Krugman, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Paul_Krugman
- Macroeconomics, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Macroeconomics
- Microeconomics, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Microeconomics
- New Keynesian economics, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/New_Keynesian_economics
- Microfoundations, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Microfoundations
- Dynamic stochastic general equilibrium, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/Dynamic...al_equilibrium
- ECB, Smets-Wouters (2003) Model, http://www.ecb.int/home/html/researcher_swm.en.html
- General equilibrium theory, From Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/General_equilibrium
Originally Posted by
Fuchs
There's a model about how inflation-corrected growth happens.
The four ingredients on the macro (aggregate) level are
(1) labour
(2) capital
(3) natural resources (exploitation thereof)
(4) technology
I am assuming that you are referring to the Nobelist Dr. Robert Solow and his Solow–Swan growth model (intellectual progeny of the Harrod–Domar model)?
Originally Posted by
Fuchs
whereas "technology" (technological progress) is the "leftover" that explains away all the growth (or shrinking) that happens after the other factors were appraised.
Technological progress is a pointless model variable for very detailed or short-term analysis, but it makes a lot of sense when you talk about decades.
I wonder why he didn't prefer to stick to technological progress instead of diving into micro here. This macro variable tells a story of a declining rate of growth, for technological progress shrinks by 0.1 to 0.2 percent points per decade. At this pace, we would run out of technological progress in about three to six generations.
The links to Dr. Krugman, and others, which I provided upthread and in this post are part of a discussion regarding factors impacting growth sparked by Dr. Gordon's recent paper. Dr. Gordon, broadly, seems to be reprising Rev Thomas Robert Malthus' argument regarding limits to growth. Dr. Krugman, Dr. Rogoff, and others find his argument interesting, but, dispute his conclusions.
By definition exogenous inputs, such as 'technology' (industrial revolutions as opposed to x-inefficiency or technical efficiency - output produced with given inputs), are difficult to predict.
My read is that Dr. Krugman is referring to technology in the sense of an unpredictable exogenous input as opposed to the more narrow macroeconomic definition examined by Dr. Solow.
So...do you see a pull back in globalization as part of the explanation of the current global malaise? Overreach by the oligarchy? 
Bookmarks