Авторы: 147 А Б В Г Д Е З И Й К Л М Н О П Р С Т У Ф Х Ц Ч Ш Щ Э Ю Я

Книги:  180 А Б В Г Д Е З И Й К Л М Н О П Р С Т У Ф Х Ц Ч Ш Щ Э Ю Я


7.13 Criticisms of New Keynesian Economics

The new Keynesian research programme has been driven by the view that the

orthodox Keynesian model lacked coherent microfoundations with respect to

wage and price rigidities. As a result the new Keynesian literature has been,

until recently, heavily biased towards theoretical developments. Many economists

have been critical of the lack of empirical work, and Fair (1992)

suggests that this literature has moved macroeconomics away from its econometric

base and advises new Keynesians to ‘entertain the possibility of putting

their various ideas together to produce a testable structural macroeconometric

model’. Laidler (1992a) also argues forcefully for the reinstatement of empirical

evidence as a research priority in macroeconomics.

Table 7.2 Evidence on reasons for price stickiness

Theory of price stickiness Percentage of firms

accepting theory

Coordination failure – each firm waiting for others to 60.6

change price first

Cost-based pricing with lags 55.5

Preference for varying product attributes other than price 54.8

Implicit contracts – fairness to customers necessitates 50.4

stable prices

Explicit nominal contracts 35.7

Costly price adjustment – menu costs 30.0

Procyclical elasticity – demand curves become more 29.7

inelastic as they shift to the left

Psychological significance of pricing points 24.0

Preference for varying inventories rather than change price 20.9

Constant marginal cost and constant mark-ups 19.7

Bureaucratic delays 13.6

Judging quality by price – fear that customers will interpret 10.0

reductions in price as a reduction in quality

Source: Adapted from Blinder (1994).

In response, new Keynesians can point to the non-orthodox but interesting

and innovative research by Blinder (1991, 1994) into the pricing behaviour of

firms, the empirical work related to testing the efficiency wage hypothesis

(for example, Drago and Heywood, 1992; Capelli and Chauvin, 1991) and

the influential paper by Ball et al. (1988) testing menu cost models using

cross-country data. In seeking an answer to the important question ‘Why are

prices sticky?’, Blinder’s research utilizes the data collected from interviews

to discriminate between alternative explanations of price stickiness, which is

regarded as a stylized fact by Keynesian economists (see Carlton, 1986, for

evidence on price rigidities). Blinder’s results, reproduced in Table 7.2, give

some support to Keynesian explanations which emphasize coordination failures,

cost-plus pricing, preference for changing product attributes other than

price, and implicit contracts.

In an interview (Snowdon, 2001a) Blinder summarized his findings on

price stickiness in the following way:

of the twelve theories tested, many of the ones which come out best have a

Keynesian flavour. When you list the twelve theories in the order that the respondents

liked and agreed with them, the first is co-ordination failure – which is a very

Keynesian idea. The second relates to the simple mark-up pricing model, which I

might say is a very British-Keynesian idea. Some of the reasons given for price

stickiness are not Keynesian at all. For example, non-price competition during a

recession. The Okun (1981) implicit contract idea is also very Keynesian … if you

look at the top five reasons given by firms as to why prices are sticky, four of them

look distinctly Keynesian in character … To the extent that you are prepared to

believe survey results, and some people won’t, I think this research strikes several

blows in favour of Keynesian ideas.

Similar work by Bhaskar et al. (1993), utilizing data collected in the UK

during the 1980s, confirms that most firms tend not to increase prices in

booms or reduce them in recessions, but quantity adjustment responses via

variations in hours, shift work, inventories or customer rationing are ‘overwhelmingly


A second major problem with the new Keynesian literature is that it has

yielded numerous elegant theories which are often unrelated (Gordon, 1990).

This makes the pulling together of these ideas in order to produce a testable

new Keynesian model all the more difficult. New Keynesians have themselves

recognized this problem, with Blanchard (1992) reflecting that ‘we

have constructed too many monsters’ with ‘few interesting results’. The

fascination with constructing a ‘bewildering array’ of theories with their

‘quasi religious’ adherence to microfoundations has become a disease. Because

there are too many reasons for wage and price inertia, no agreement

exists on which source of rigidity is the most important (for a critique of

efficiency wage theory, see Katz, 1986; Weiss, 1991).

A third line of criticism also relates to the menu cost literature. Critics

doubt that the small costs of price adjustment can possibly account for major

contractions of output and employment (Barro, 1989a). Caplin and Spulber

(1987) also cast doubt on the menu cost result by showing that, although

menu costs may be important to an individual firm, this influence can disappear

in the aggregate. In response to these criticisms, new Keynesians argue

that the emerging literature which incorporates real rigidities widens the

scope for nominal rigidities to have an impact on output and employment

(see Ball and Romer, 1990; D. Romer, 2001). A further weakness of models

incorporating small costs of changing prices is that they generate multiple

equilibria. Rotemberg (1987) suggests that ‘if many things can happen the

models are more difficult to reject’ and ‘when there are multiple equilibria it

is impossible to know how the economy will react to any particular government

policy’. Golosov and Lucas (2003) also highlight that in calibration

exercises their menu cost model is consistent with the fact that ‘even large

disinflations have small real effects if credibly carried out’.

A fourth criticism of new Keynesian economics relates to the emphasis it

gives to deriving rigidities from microfoundations. Tobin (1993) denies that

Keynesian macroeconomics ‘asserts or requires’ nominal and/or price rigidity.

In Tobin’s view, wage and price flexibility would, in all likelihood,

exacerbate a recession and he supports Keynes’s (1936) intuition that rigidity

of nominal wages will act as a stabilizing influence in the face of aggregate

demand shocks. Tobin also reminds the new Keynesians that Keynes had a

‘theoretically impeccable’ and ‘empirically realistic’ explanation of nominal

wage rigidity based on workers’ concern with wage relativities. Since a

nominal wage cut will be viewed by each group of workers as a relative real

wage reduction (because workers have no guarantee in a decentralized system

of knowing what wage cuts other groups of workers are accepting), it

will be resisted by rational workers. Summers (1988) has taken up this

neglected issue and suggests relative wage influences give rise to significant

coordination problems. Greenwald and Stiglitz (1993b) have also developed

a strand of new Keynesian theorizing which highlights the destabilizing

impact of price flexibility.

A fifth criticism relates to the acceptance by many new Keynesians of the

rational expectations hypothesis. Phelps (1992) regards the rational expectations

hypothesis as ‘unsatisfactory’ and Blinder (1992a) notes that the empirical

evidence in its favour is ‘at best weak and at worst damning’. Until someone

comes up with a better idea, it seems unlikely that this line of criticism will lead

to the abandonment of the rational expectations hypothesis in macroeconomics.

However, with respect to the formation of expectations Leijonhufvud is enthusiastic

about recent research into ‘Learning’ (see Evans and Honkapohja, 2001;

Snowdon, 2004a).

A sixth problem identified with new Keynesian economics relates to the

continued acceptance by the ‘new’ school of the ‘old’ IS–LM model as the

best way of understanding the determinants of aggregate demand. King (1993)

argues that the IS–LM model has ‘no greater prospect of being a viable

analytical vehicle for macroeconomics in the 1990s than the Ford Pinto has

of being a sporty, reliable car for the 1990s’. The basic problem identified by

King is that, in order to use the IS–LM model as an analytical tool, economists

must essentially ignore expectations, but ‘we now know that this

simplification eliminates key determinants of aggregate demand’ (King, 1993).

King advises macroeconomists and policy makers to ignore new Keynesian

advertising because, despite the new packaging, the new product is as unsound

as the original one (however, see section 7.12 above).

Finally, Paul Davidson (1994) has been very critical of new Keynesian

analysis, claiming that ‘there is no Keynesian beef in new Keynesianism’.

From Davidson’s Post Keynesian perspective, new Keynesians pay no attention

to crucial aspects of Keynes’s monetary theory (see Chapter 8). However,

Mankiw (1992) does not regard consistency between new Keynesian analysis

and the General Theory, which he describes as ‘an obscure book’, as an

important issue.