Macroeconomics and its history

Abstract

World War II was the key development in the history of economics of the 20th century. It was a scientific war that secured the United States as an academic and geopolitical power, receiving a host of European scholars fleeing from authoritarian regimes, and it brought economists in contact to applied mathematicians and statisticians in war projects, with operations research becoming the typical locus for this exchange of expertise. The challenge historians of economics thus face is to provide a rich context in which to place the scientific developments, which include, among many others, how mathematical tools crossed disciplinary boundaries of mathematics and engineering and came into economics; how economics changed in face of the massive expansion of the universities in the US immediately after the Second World War and established itself as one of the dominant discourses in contemporary society; how economic policymaking increasingly became a tool-oriented and technical enterprise, with economists trying to avoid as much as possible value judgments in their advices; the establishment of macroeconomics as a genuine separate area of economics; etc. The historiography of macroeconomics is too much structured around the idea of "schools of thought" competing with one another. If grouping macroeconomists in sets with clear commonalities can be useful for pedagogic purposes, framing the historical developments in macroeconomics too much in terms of theoretical disputes simply misses the fundamental characteristic of economics in the postwar period: that it is a science of models, which are objects that do not pertain to the linear space that has as opposite poles "theories" and the "real world". Bringing models and techniques to the forefront of the history of macroeconomics is central, as macroeconomists can only observe the fluctuations of the economy as a whole, or its growth, through building and manipulating models. In particular, that grouping effort is commonly produced by practicing macroeconomists such as characterizing mainstream macroeconomics in the 1980s as the fight between real business cycle theorists (followers of Robert Lucas and his policy ineffectiveness result) and new Keynesians (who favored government intervention). Professors Assous and Duarte are working on a research project analyzing how a wide group of macroeconomists used the dynamic structure of the so-called overlapping-generations model to counteract Lucas and his followers, enriching the potted history of macro in the 1980s. Besides developing and extending this common research project during his visit to FEA-USP, Professor Assous will offer a mini-course for graduate students on the history of macroeconomics through the different conceptions about the stability of a market economy. He will also interact closely with the group of professors in the history of economics and in macroeconomics who are part of our graduate program and closer to his research interests (in particular Professors Gilberto Tadeu Lima, Laura Carvalho e Fernando Rugitsky). (AU)