Tiago Mata

The Solow Residual as a Black Box: Attempts at Integrating Business Cycle and Growth Theories in History of Political Economy, with Francisco Louçã, 2009, 41(Supplement 1): 334-355.

Argument
Robert Solow’s “Technical Change and the Aggregate Production Function” (1957) has had an enduring influence on macroeconomics. In this article, we examine the history of fluctuations in growth theory
through the story of the “Solow residual” as a “black box.” We show that after Solow’s seminal contribution, the “residual” became a reproducible object. Losing its ties with the intentions and beliefs of its originator, it was given new and unexpected uses in other branches of macroeconomics. While the residual had always remained a problematic result in growth accounting, its borrowing by real business cycle theorists sought to establish it as a definitive representation of technology. As the claims of the New Classicals came under scrutiny, so did the status and meaning of the object residual. The integration of growth and cycle has since been shaped by the opening of this “black box.” Edward Prescott has remained committed to his earlier interpretation of the “Solow residual” as stochastic technology. Others have sought to bracket multiple supply shocks as the residual, abandoning attempts to decompose it. To the New Keynesians the “residual” has been more evidence of market power and the need to integrate rigidities in the study of the cycle.

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Over the last year I have taught briefly about the origins of modern finance, a topic that has fascinated Edinburgh sociologists, and magazine writers. In one of the courses I used excerpts from the recent book by Justin Fox, The Myth of the Rational Market. What surprised and pleased me in this book was the balance between the academic and the practitioner in making sense of the academization of finance, something that Donald MacKenzie does well, as does Peter Bernstein before anyone else. Fox starts with Irving Fisher and for his cast of characters the book is a history of economics.

Looking at the references, not many since this is a popular book, I could not find any many mentions of historians of economics, which worried me more than it bothered me. I emailed J. F. about it and he replied:

I read Ingrao and Israel’s ‘Invisible Hand’ (and I’m pretty sure I cited it in the endnotes), a few articles by E. Roy Weintraub, parts of Mirowski’s books and parts of economic histories/biographies of Jevons, Marshall, Hayek and others. But I’ve got to say I was often frustrated with these works; they would usually start off interesting but then veer off in directions that I didn’t see as important.

This, I think, is rather good. Even though there are no tips of the hat to us historians of economics in the preface or anywhere else, even though we go off on tangents that don’t seem to interest the journalist and the wider public, we are read, we are considered.

… well not quite. But I made the longlist for the Teacher of the Year 2009 at the University of Amsterdam. There I am: “T.J.” in my passport (full) name regalia.

It is nice to “feel the love” from the students, and that maybe I picked the right job for me.

I’ve been working on a paper on the response of American social science associations to scandals of political discrimination in the 1960s and 1970s. Did you finish that sentence? It should have been drama, suspense filled text: counterinsurgency, people getting fired, protests, intrigue, but I failed to get much of that in. The text has big words and long sentences. I decided to turn wordle on it and see what came up. Click below…

From Twitter Volume.

What is left after satire corroded all possibilities? In the last few days I have become addicted to the song below. Its euphoric positiveness and the counterpoint of negativity. It parodies truthfully a certain way of being political and Portuguese.

Once you place enthusiasm against its inverted self, does enthusiasm survive? One could say it’s simply dialectics, one ravages the other. But I don’t see the next step in the progression.

I see a hollow, dark place, of silence, neither positive, nor negative, instead indifferent and laughing and displaced. Maybe it is nothing to do with the song, and everything to do with where I listen to it. I am no longer there, where this satire happens with conviction and without self-perspective, so I cannot be in it, and resolve it.

Recently, the Federal Reserve of the USA hired a lobbyist to advance its cause in Congress. The Federal Reserve Bank of San Francisco contributes to the campaign to regain public trust by way of a web gamegr. The game invites one to be a Fed Chairman and set the Federal Funds Rate against a shock (permanent, or temporary, contraction or expansion), the player needs to adjust the hydraulics to keep the time series close to the target inflation rate, i.e. keeping employment at the “natural” rate.

(via Economix)