Modern Macroeconomic Methodology
Seems to be quite the topic yesterday. I wrote this about a week ago and maybe it’s time to post it.
Modern Macroeconomic Methodology (MMM) rests on two pillars: Milton Friedman’s methodology of positive economics and the Lucas critique. The problem is that an alternative possible title for “Econometric Policy Evaluation: A Critique” is “The Methodology of Positive Economics: A Critique.” One of the pillars consistgs essentially of the claim that the other is unsound.
How can two opposite claims both support the same theoretical edifice ? I think it is very simple, Friedman’s methodology for me, the Lucas critique for thee.
I argue my claims at boring length over at my personal blog.