For much of my undergraduate and early graduate career, I considered macroeconomics to be an imaginary field of study. After all, macro is just a scaled up version of micro economic action, right? In fact, this is often remarked as truth by many of my peers and professors. Macro is make-believe. How could it not be after the 2007-09 financial crisis? Everything we had learned prior to that point seemed to go out the window.
Since that time, there has been a resurgence in the study of graduate level economics. I think this is probably a net positive, more eyes to acres as Wendell Berry would say. But with growth in economists also comes more variety in ideas. While studying for my macro qualifying exams last summer, I began early and devoted 20+ hours each week to studying. The macro portion was by far the more difficult of our exams. During this time, two things happened: 1) I saw how the models and ideas of macro theory met at various intersections and 2) I read Richard Wagner’s pieces on macro as an ecology of plans and Viennese Kaleidics. I wont reiterate these papers here, but it gave me a perspective on macroeconomics which I had yet to see.
Macro is more than the sum of its parts. It is not simply an aggregation of micro actions, but those micro actions affect the macro environment which in turn affects the micro actions. This is a self-perpetuating feedback loop. Unlike all of the early growth models, everything in the macro economy is endogenous (except for the a priori system parameters).
We’re on the cusp of a brave new world of macro theory. Where this goes depends much on the current generation of economists. I am looking to follow a system theoretic and make use of agent modelling. My colleagues have suggested OEE and other forms of advanced techniques; I haven’t settled on one yet, but I’ve spent some time looking into the various programs and software.
In closing, I’ll leave you with this quote from Andrew G. Haldane at his 2016 GLS Shackle address:
“Although (the recent) crisis in economics is a threat for some, for others it is an opportunity — an opportunity to make a great leap forward, as Keynes did in the 1930s. For the students in this room, there is the chance to rethink economics with as clean a sheet of paper as you are ever likely to find. That is perhaps why the numbers of students applying to study economics has shot up over recent years. This is one of the silver linings of the crisis. No discipline could ask for a better endowment. But seizing this opportunity requires a re-examination of the contours of economics and an exploration of some new pathways.”