I always find it hilarious when some smart economist like Brad Delong or Scott Sumner pull their heads out of this keister and notice their field doesn’t even agree on the basic observations necessary to make decisions.
Here’s Scott Sumner talking about Nobel Prize winning economist John Taylor:
“And that’s actually pretty mind-boggling, when you think about it. It’s not that strange that we might differ on whether current monetary policy is contractionary or accommodative (although non-economists must be appalled that economists can’t even agree on something as basic as that.) What’s really shocking is that we even agree on the four effects from that monetary policy, even though logically one would think that accommodative policies would produce the exact opposite effect from contractionary policies. ”
This is what happens when you operate in a system devoid of agreed upon empirical checks, or that weave in assumptions about the future which can never be known.
The reason we’re big on Godley over here is because the Godley/Lavioe/(Cripps?) system is ground up coherent. By design, this stock-flow consistent model takes into account everything in the economy, in a logical and coherent manner.
If you somehow discover something Godley/Lavioe missed, you can put it into the model. You just need to make sure the model of the economy is stock flow consistent, because our economy is stock flow consistent.
This isn’t true for most other models in macro economics. You’ll find smart people disagreeing on the most basic facts, the most elementary observations, the simplest conclusions because the model doesn’t link to the real world, and it doesn’t demand internal consistency. It’s like doing simple electrical circuit physics and just throwing away 50% of the current flow through the system, because, well I don’t know why.
So, Mr. Sumner, you’re welcome to come over here, read a few posts, and see if you can spot why MR will be drinking your milkshake.