Paul Krugman on the MIT History

My friend and “grown-up kid” Yann Giraud just called my attention to Paul Krugman’s recent column, “Empire of the Institute”, on Roy Weintraub’s recently edited HOPE volume “MIT and the Transformation of American Economics” (to which three Playground kids contributed: Yann, Beatrice Cherrier and myself).

Krugman wanted to give his personal views on the period (after the 1970s) when “the Institute”, through its graduate students, really occupied key places in the world of policymaking and policy debate: figures like Rudi Dornbusch, Olivier Blanchard, Stanley Fischer, Ben Bernanke, Maurice Obstfeld, Kenneth Rogoff, and Mario Draghi (besides Krugman himself), all became internationally renowned players in the economic arena.

To understand this phenomenon and to distinguish MIT from Chicago economists, Krugman emphasizes the committment at MIT to “real-world” (or policy) relevant theories:

The result was that MIT macroeconomics was teched up — everyone learned how to write down and solve rational expectations models, everyone learned how to emulate Lucas disciples — but didn’t unlearn Keynesian insights. And MIT students developed a style that was either wonderfully pragmatic or disgustingly lacking in rigor, depending on your tastes (…)

But then, taking the argument one step further, what about the other types of “relevant” Keynesian theories that were developed at the same time in places such as Harvard, Berkeley, and Yale, just to cite a few universities?

Nicely, Krugman is conscious that he is exploring “the kind of question that should be handled by a professional historian of thought”, and he nonetheless offers interesting insights into what was going on at MIT while he was a member of the Institute. Finally, take his opinion that the volume is “— as Spock would say — fascinating” as a welcoming invitation to dig into it!

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