I have argued in our department at GMU that we should eliminate macroecoonomics from the core and expand our microeconomic course offerings. But does that mean I believe that topics traditionally associated with macroeconomics should not be part of the training of economists? Of course NOT. Monetary theory, business cycles, capital theory, labor economics, etc. are all important subjects for economists to master.
There are macroeconomic problems of inflation, unemployment, fluctuations, but the explanation for these and the solution to them policy wise is to be found in microeconomic analysis. "Austrian" macroeconomics is in fact built up from this microfoundation. When I got interested in Austrian ideas it was the late 1970s and macroeconomics dominated economic-speak, so the Austrian theory of the trade cycle and the focus on what government had done to money was how I learned of the Austrian school. I was then taught backwards to the theory of value and price, capital and interest, socialist calculation, and eventually to method and methodology, and finally back to entrepreneurship and development.
In many ways students today find themselves in the same situation I did in the late 1970s. And with the times comes a variety of restatements of the Austrian approach to macroeconomics.
George Selgin has a wonderful interview in the Richmond FED periodical that is a must reading.
Roger Garrison's FREEMAN article on mainstream macroeconomics is also an important piece to read.
Steve Horwitz, Larry White and Gerald O'Driscoll have been constant in their commentary throughout the entire financial crisis.
An interesting exercise might be to read O'Driscoll and Shenoy's essay from Foundations of Modern Austrian Economics, which summed up the situation in the early 1970s and compare that with Garrison's piece. What have we learned in the past 30 years, what knowledge was lost, and we do we go (a) teaching wise, (b) research wise, and (c) policy advocacy wise?
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