Theories of the Trade Cycle (or Monetary Theory)
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Division: The New School for Social Research
Course Number: GECO 6040
Course Format: Seminar
Location: NYC campus
Permission Required: No
In his Nobel Memorial Prize Lecture, Prescott ‘announced’: “[T]he meaning of the word macroeconomics has changed to refer to the tools being used rather than just to the study of business cycle fluctuations. Prescott’s Nobel predecessor, George Stigler , in reviewing - somewhat pungently - Paul Samuelson’s magnum opus, the Foundations of Economic Analysis, was more measured in his claims for the characterising role for ‘tools’ (which is, usually, an euphemism for ‘mathematical tools’): “[B]ut who can know what tools we need unless he knows the material on which they will be used.” Macroeconomics, from the outset, was much more than ‘just .. the study of business cycle fluctuations’. Today, one hundred and one years since the publication of Wesley Mitchell’s monumental (641 pages!) classic, Business Cycles (in which, Lucas claimed, without any textual justification, there was an assumption of agents as signal processers’) – flanked by Schumpeter’s own magnum opus on The Theory of Economic Development, and Robertson’s A Study in the Theory of Economic Fluctuation (note the singular ending!), a little earlier, and an year later, respectively, it is still an active field of pure theoretical research (as well as a rich source, naturally, of empirical investigation). In these lectures, an attempt will be made to trace the story of the way business cycle theory – once known as trade cycle theory – came to be a defining element of macroeconomic theory. To narrate this story, eschewing any Whig attempts, I choose as the subtheme, One Hundred Years of Trade Cycle Theory – Conceptual Developments, Theoretical Technologies and Methodological Frameworks. There will be no definite ‘Textbook’ for the course, but I would like to assume that those who intend attending the lectures familiarize themselves with at least a couple of the following classic books: ? Prosperity and Depression: A Theoretical Analysis of Cyclical Movements (3rd Edition), by Gottfried Haberler, United Nations, Lake Success, New York, 1946. ? A Contribution to the Theory of the Trade Cycle by John Hicks, Clarendon Press, Oxford, 1950. ? Models of Business Cycles by Robert. E. Lucas, Jr., Basil Blackwell, Oxford, 1987.
Course Open to: Degree Students with Restrictions