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Trading Places

Posted in Contemporary economics Tagged with: ,

An especially interesting contretemps in economics has been resolved with a trade of sorts that promises gains in two places. It was just two years ago that Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, fired two researchers and demoted a third, Kei-Mu Yi, head of his research department. He also cancelled visiting arrangements with two prominent University of Chicago economists, Robert Lucas and Nancy Stokey. All were associated with an esoteric macroeconomic research tradition known as “real,” or technology-driven, business cycle theory that has been pioneered by economists associated with the University of Minnesota and the bank.