The State of Macro

This morning, I finished an excellent EconTalk episode in which Russ Roberts interviews Ricardo Reis on the topic of what we do and don't know about macroeconomics.  This interview represents one data point in a recent flurry of papers and talks relating to the state of marcoeconomics.  I thought I'd put together a list of these sources here.

Recent papers (in order of my preference):
Recent interviews:
The common themes throughout these articles and interviews are that:
  • Microfoundations are very important
  • Identifying the structural parameters are key for policy analysis
  • Both Neo-classicals and New Keynesians agree on what an ideal model should have (it's a structural model that fits both micro and macro data)
  • Neo-classicals and New Keynsians differ on the degree to which one can comprimise along certain dimensions (matching macro data, using a structural model with policy invariant parameters, etc.)
  • Economists have a much better understanding of monetary policy than they do of fiscal policy.  This is true in both the theory and empirics.
The present crisis will spur a revolution in macroeconomics and it's appropriate that we are taking a closer look at what were are doing now and how we got here.  I anticipate macro work taking an new appreciation of financial institutions and fiscal policy.  Given the global nature of the crisis, I also see work on monetary policy in open economies taking on much more importance.