Macroeconomic Measurement Versus Macroeconomic Theory (Routledge Frontiers of Political Economy)

Description

Ideally, scientific theory and scientific measurement should develop in tandem, but in recent years this has not been the case in economics. There used to be a time when leading economists, or their students, established or led statistical offices and took care that the measurements were consistent with the theory (and vice versa). Not anymore. Macroeconomic theorists and macroeconomic statisticians do not even speak the same language any longer. They do use the same words, such as ‘consumption’, ‘investments’ or ‘unemployment’ but the meanings can often be different. This book maps the differences between macroeconomic theory and measurement and explores them in some detail while also tracking their intellectual, historical and, in some cases, ideological origins. It also explores the possible policy implications. In doing so, the book draws on two separate strands of literature which are seldom used in unison: macro-statistical manuals and theoretical macro-papers. By doing so, the book contributes to the effort to bridge the gap between them without compromising on the idea that a meaningful science of economics should, in the end, be based upon individual people and households and their social and cultural embedding instead of a ‘representative consumer’, or Robinson Crusoe figure. This work is essential reading for students, economists, statisticians, and professionals. Cover Half Title Series Title Copyright Contents List of tables List of graphs List of figures and diagrams Preface 1 Introduction Introduction 1.1 Why this book? 1.2 Conceptual differences extend to the cores of neoclassical macro theory and statistical macro-measurement 1.3 The two very different meanings of ‘micro-founded’ 1.4 The differences between macro-models and macro-statistics have a history 1.5 Macroeconomic events outside the framework of neoclassical macroeconomic models as well as macroeconomic statistics 1.6 The changing boundary of our idea of ‘the (macro) economy’ and the immensely measurable nature of monetary transactions 1.7 Hey, national accounts are political accounts 1.8 Overarching integration: the modern flow of funds / national accounts 1.9 An overview of the key differences between DSGE macro-models and macro-measurements 1.10 Mitchell-style business cycle indicators, the accounts and DSGE models 1.11 The conceptual model of the book (1): five interrelated phases of development of a macro-statistical variable 1.12 The conceptual model of the book (2): cases 1.13 The conceptual model of the book (3): meta-formulas 2 Money, prices and pricing 2.1 Introduction 2.2 Transactions 2.3 Prices and pricing 2.4 Money 2.5 The nature prices and pricing in a monetary society 2.6 The nature of the statistical production boundary 2.7 National accounts as an instrument of control 3 Money and how it’s estimated 3.1 Introduction 3.2 Money and its measurement 3.2.1 Monies, manuals and measurement 3.2.2 The flow of funds as an overarching model 3.2.3 The monthly monetary press release of the ECB and the macroeconomic formula of everything 3.2.4 Single accounting concepts of the account of money (1): Friedman and Schwartz 3.2.5 Single accounting concepts of the amount of money (2): Divisia indices 3.2.6 Quadruple accounting aggregates: money and debt 3.3 Money and the models 4 Labor and unemployment 4.1 Introduction: the discussion at the heart of macroeconomics 4.2 The concept of involuntary unemployment 4.3 Measured employment, unemployment and labor flows 4.3.1 Where do the concepts and definitions come from? A bit about the International Labor Organization 4.3.2 The ILO definitions of employment and unemployment and the influence of the US Congress 4.3.3 The ILO ‘periodic table’ of monetary and non-monetary work, unemployment and leisure 4.3.4 The difference between people and jobs 4.4 Neoclassical ideas about labor and the working of the labor market 4.4.1 Concepts and definitions: leisure and the difference between people and hours 4.4.2 Deconstructing the future 4.4.3 Fundamental and non-fundamental ways to make the models consistent with high unemployment 4.4.3 Models which take the statistics at face value 4.5 Voluntary and involuntary declines in hours of labor and unemployment during the Great Depression and beyond 4.5.1 The anomaly 4.5.2 The institutional/statistical explanation of the anomaly 4.5.3 The neoclassical explanation of labor during and after the Great Depression 4.6 Summary 5 Capital (and land) 5.1 Introduction 5.2 The (r)evolutionary nature of capital 5.3 Capital and the statisticians 5.3.1 Concepts and definitions 5.3.2 Measurements 5.3.3 Valuations 5.3.4 Volumes 5.3.5 Natural capital? 5.4 Capital and the neoclassicals 5.4.1 The concept, implicit or otherwise 5.4.2 Back to the way ahead 5.5 A comparison 6 Consumption 6.1 Introduction: the concept 6.2 Consumption in the national accounts: definitions and operationalizations 6.3 Consumption in the DSGE models 6.4 A comparison 7 I stands for gross fixed capital formation 7.1 Introduction 7.2 Concepts: the changing nature and definition of gross fixed capital formation 7.3 Statistical definitions 7.4 ‘Investment’ as a variable in the DSGE models 7.5 Time consistency 7.6 Measurement and our intertemporal understanding of the macroeconomy: the rise and decline of the investment rate of the Western world, ca. 1807–2018 7.6.1 The USA: exceptionalism 7.6.2 France and the UK: catching up versus falling behind 7.6.3 Germany, the Netherlands and the Nordics: archetypes 7.6.4 Italy, Spain 7.7 Overview 8 Unreal production 8.1 Introduction: how real is ‘real’ production 8.2 Single and double deflation 8.3 Putting formulas to the test: superlative index numbers and Dutch agricultural production and prices, 1851–2016 9 Macroeconomic unit labor costs as we measure them are no indicator of competitivity 9.1 Introduction 9.2 NULC, RULC and ULC Epilogue Index