Barkley Rosser wrote:
>
> But some on this list have been busy declaring that AD is simply a 
> useless concept
> for various reasons, with this long proven and accepted by everybody 
> and anybody
> who has a grain of sense or knowledge of what has been going on in 
> economics. 


Yes, that is the question I had in mind when I raised the issue. The 
fundamental issue as I see it is: "why do economists teach this stuff?" 
And, of course, why to HESers not present it as an anachronism, rather 
than as science? Are they using the authority derived from their 
credentials to compel students to add dead weight to their human 
capital? The only answers I have heard so far are words. Fred, for 
example, talked about deriving an equilibrium price level. This is like 
the answer "to get to the other side" as a response to the question "why 
did the chicken cross the road." Barkley, do you have a better answer?

Your initial post framed the issue in terms of whether the AS curve is 
fixed or not. If it was fixed, then such and such would happen. If it 
was not fixed, then such and such would happen. Then you pointed to a 
casual observation of pre-war Germany claiming that that this 
demonstrated a shift in aggregate demand. In a later post, you talked 
about the central bank's target variable. You seemed to imply that 
because the central bank does such and such, economists should study 
such and such. But you did not, as I see it, get to the heart of the 
question. What is the purpose of the Keyensian based macro models? How 
does building them for publication differ from playing a game of chess? 
And how does teaching them differ from teaching how to play chess?

Many years ago, in an econometrics study group, I read a paper by 
Christopher Sims. In that paper, he seemed to me to be writing that the 
whole business of macro modeling, even at the highest level of "our 
science," may be a huge waste of intellect, although we keep hoping for 
some breakthrough. One had to read between the lines to make this 
interpretation. My econometrically-minded colleagues were optimistic 
about making breakthroughs, while I simply observed how much time and 
energy seemed to have already been wasted. This is the paper:

Sims, Christopher A, 1980. "*Macroeconomics and Reality 
<http://ideas.repec.org/a/ecm/emetrp/v48y1980i1p1-48.html>*," 
Econometrica <http://ideas.repec.org/s/ecm/emetrp.html>, Econometric 
Society, vol. 48(1), pages 1-48, January.

You can find a list of Sims papers at:

http://ideas.repec.org/e/psi12.html

A conference was held in Barcelona a couple of years ago that revisited 
Sims' paper. Sims himself made a presentation at the conference. An 
outline of his lecture is online. After 25 years, there seems to be 
quite a bit more pessimism. But it is remarkable that Sims still sees a 
bright side to the use of all this energy.

http://www.crei.cat/activities/sc_conferences/22/sims-program%206.pdf

Sims' presentation at the conference, in the form of an outline, is online:

http://www.crei.cat/activities/sc_conferences/22/Papers/sims.pdf


Pat Gunning