Sunday, April 3, 2011
Pg. 212-214
As Lucas' ideas were being accepted and the debate between Keynesians, and monetarists was heading in favor of the monetarists, a new party with different ideas from the monetarists and the Keynesains was developing. Ever the independent, Black became interested in this new movement. The Real Business Cycle movement, as it was called, believed that outside technology shocks were the cause of most of the fluctuations in the business cycle. Black didn't really like this idea, and the authors of the movement weren't inclined to support his ideas either. Black critiqued all of econometrics by saying "...successful calibration does not imply that a model has correct structure any more than correlation implies causation." What ended up happening was that Black left the academic world. He said that his creativity was flagging. It seems to me, as the book describes it, that he was just bored with academics. Black's ideas were not being accepted, and he saw more, or greater, opportunities outside of academics, so he decided to pursue them instead.
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A for Braley.
ReplyDeleteI like Braley's suggestion that Black left academics because his ideas were not being accepted. Having said that, though, it also seems to me that Black had difficulty staying in one place and establishing a foundation.
Real business cycle theory was so hot in the 80's. I hated it, but that was probably a professional mistake: I should've gone with the flow. It's odd to assume that technology is driving both growth and recessions. But it's supported by the simplest of points: the correlation between variables in recessions looks like what would happen if technological growth was flagging. Often this seems to be because old technology is being abandoned.