Do Microfoundations address the Lucas Critique?

Modern macroeconomics has been endlessly criticized, not only by critics of mainstream economics, but also by many prominent mainstream economists. For example, nobel price winners such as Paul Romer, Paul Krugman, and Joseph Stiglitz have written articles in which they disparage modern macroeconomists. Even economists who have been very involved with such models such asContinue reading “Do Microfoundations address the Lucas Critique?”

Casey B. Mulligan and the Competency Problem in Economics

The other day on twitter I had a conversation I’ve had many times. An economist defending price theory said that Usually, this wouldn’t be very notable. I have lost track of the number of PhD economists I have caught making this mistake. But as I looked into this person’s position within the field of economics,Continue reading “Casey B. Mulligan and the Competency Problem in Economics”

Competition with increasing returns to scale

When I criticize mainstream economics for neglecting increasing returns to scale there is one argument that is always brought up. In its most basic form the argument goes: an industry with increasing returns to scale is a natural monopoly. Since most companies are not monopolies, increasing returns to scale must not be common. I haveContinue reading “Competition with increasing returns to scale”