金融危机引发的“经济学海啸”

    我认为，金融危机对经济的破坏如果不能引起人类思想的进步，那么，人类在经济上的损失就无疑是一种纯粹的浪费了。虽然这场危机终将过去，但是，危机永远是一所学校，我们需要从中学习的东西很多很多，因为这场危机的过去，并不代表它或其它形式的危机永不再来。

   我的一位同事，给我转发了英国《经济学家》杂志今年7月第12期上的一篇文章，里面讨论了金融危机对宏观经济学和金融经济学的冲击。我将此文的中文译文和英文原文转贴于此，供朋友们一阅。

空想哲学家们

　　Jul 16th 2009

　　From The Economist print edition

　　尽管危机暴露了经济学家之间的严重分歧，但对经济学来说仍是件好事。我们的第一篇文章着眼于宏观经济学家间的内乱，第二篇则研究金融经济学的基础

　　ROBERT LUCAS是他那一代最伟大的宏观经济学家之一，他及其信徒“学说中到处都是古老而基本的分析性错误”。该领域的另一个领军人物，哈佛的Robert Barro正“提出真正愚不可及的论点”。过去三十年中，美、英大学的宏观经济教育是“对时间的奢侈浪费”。

　　对门外汉来说，经济学永远是种沉闷无趣的科学。但上述种种攻击却来自业内人士，他们分别是：Brad DeLong，来自加利福尼亚大学伯克利分校（the University of California）；普林斯顿大学和纽约时报（the New York Times）的Paul Krugman；以及伦敦经济学院（the London School of Economics）的Willem Buiter。过去两年的宏观经济危机也引发了对宏观经济学本身的信任危机。6月10日在伦敦经济学院，Krugman先生在最近一次纪念利奥尼尔?罗宾斯(Lionel Robbins)的讲座中提到，他担心最近30年宏观经济学的研究成果“说好听点就是一无是处，说难听的，那就是贻害世人”。

　　这些内部批评家认为经济学家忽略了危机的根源；无法识别最糟糕的症状；也无法对救治措施达成一致。换句话说，经济学家既不能识别经济何时上升，也不能识别它何时下滑，因而现在也无法找到正确的出路。

　　在经济上升阶段，宏观经济学家并非全都沾沾自喜。其中许多人想到房差泡沫会破裂，美元会下跌。但他们没预料到金融系统会崩溃。即使在2007年8月银行同业拆借市场受到冲击时，宏观经济学家仍然低估了这一事件所预示的危险。那时他们多数仍对雷曼兄弟的前景颇为乐观，而该银行于2008年9月宣告破产。

　　目前经济学家尚未对什么才是解决危机的最佳途径达成一致。他们多半高估了通常所用的货币政策（比如，央行购买政府债券）在恢复经济繁荣上起的作用。如今一些人不认为财政政策（如政府发行债券）能起到同样效果，其他人则热切支持这种政策。

　　财政政策的热情拥护者就包括DeLong先生和Krugman先生。他们将目光转向大萧条时代的文献，特别是凯恩斯的大作以及象Hyman Minsky这类被遗忘的持不同意见者，从中寻找灵感。人文学科会将此算作学术成就，但对许多高技术经济学家来说，这样做未免有点自贬身价。毕竟，真正的科学家不可能翻翻牛顿的“数学原理”，就将当代物理难题一一解决。

　　这些高技术经济学家指责DeLong和Krugman这些同行居然向过时的凯恩斯教条求助，就好像过去70年他们什么也没学到一样。DeLong 和 Krugman两位先生则反唇相讥，说Lucas这类经济学家竟然不懂得依靠凯恩斯经济学，就像这一学说在过去70年来被彻底遗忘了一样。对Krugman先生来说，我们正生活在“宏观经济的黑暗时代”，失去了古人的智慧。

　　那么这种智慧是什么，它又是如何失去的呢？宏观经济的历史始于知识界难题。凯恩斯写的《就业、利息和货币通论》1936年发表，据某些读者说，这本书用了一种“毫无必要的引起争议的基调”。但这却是在作者思想中进行的自我辩论。他将此书视为脱离继承自传统经济学派前辈的思维定式的一种努力。

　　传统经济学思维模式认为完全就业将会普及，因为供应本身就会创造需求。传统经济中，人们挣的钱要么花掉，要么存起来；而无论哪种存钱方式都是属于资金项目投资。没有什么是收储起来，闲置一旁的。

　　凯恩斯欣赏传统模型的简洁性与连贯性，这些优点经济学家至今仍颇为向往。但这无法阻挡他摧毁这一理论。在他的设计中，投资由企业家的“动物精神”驱动，其前途充满了不确定性。同样，不确定性使存款者以流动资产的形式储存自己的财富，比如金钱，而非将其投入新的投资项目。这种凯恩斯所谓的流动性偏好控制金融证券的价格进而控制利率。如果企业家丧失动物精神或流动性偏好上升，投资将步履蹒跚，且没有明显的市场力量使其恢复。需求将少于供给，致使愿意工作的人失业。推动需求的责任落到政府头上，如果可能的话，政府需削减利率；必要时也可增加公共建设工程。

　　凯恩斯的“需求管理”在大萧条之后继续存在，并且成为政府日常职能。经济顾问建立了经济运作模型，对关键关系进行定量；而政府接受了这些经济顾问的帮助。二战后近三十年来，这些顾问以通胀和失业率的权衡比较作为目标，他们似乎清楚自己的所作所为。但他们的可靠性经不起20世纪70年代一系列油价冲击的考验，这使西方各经济体陷入滞涨，即令人困惑的失业率、通胀双高现象，而凯恩斯主义者对此也理解有限，无法防止。

　　美联储在Paul Volcker的领导下，最终击败20世纪80年代早期的美国通胀，尽管在就业方面付出惨重代价。但这一胜利未能恢复知识界的和平，宏观经济学家从这一时期吸取了大相径庭的教训，分裂为两大阵营。

　　纯粹主义者，由于集中处于几个湖畔大学中，也被称为“淡水学派”经济学家。他们将滞涨归咎于永不休止的央行银行家们试图干预过多。他们起步于市场出清的古典假设：货物售罄，所有工人都受到雇佣。决策者为减缓经济本身固有波动而做出的种种努力，实际上弊大于利。

　　美国海岸边的大学则汇聚了另一派“咸水学派”实用主义者的大多数人。对他们来说，伴随Volcker先生压制通胀举动产生的两位数的失业率，充分证明了市场可能失灵。工资可能无法调整，价格呈现粘性。经济机器的故障证明了决策者某些干预的必要性。

　　Volcker式的衰退在1982年见底，其后直到去年，类似的衰退再也没有重现过。在25年波澜不兴的日子里，宏观经济也恢复了自身的平静。两大对立学派的理论相互融合。淡水学派经济学家接受了决策干预这一咸水学派的观点。咸水学派则采纳了淡水学派的建模方式。也许可以将二者统称为新古典综合宏观经济。

　　咸水学派之痛

　　半咸宏观经济从大学流传到央行。以半咸宏观经济为理论基础，抑制通胀在新西兰、加拿大、英国、瑞典以及包括土耳其在内的几个新兴市场成为“宏观经济政策的教条”。自2006年以来就担任联邦储备局主席的本?伯南克（Ben Bernanke）声名赫赫，对半咸经济学作出重大贡献。

　　在危机前约十年，宏观经济学家再度表现出知道自己在做些什么。他们的思想体现在一种经济运作新模型上，称为“动态随机一般均衡（DSGE）”模型。这些模型对几个央行中进行的各类商讨活动起到引导作用。

　　Buiter先生在1997到2000年间帮助制定英格兰银行的利率，他相信最近的学术理论对该银行产生了重大影响。他现在认为这种影响是有害的。他在自己的博客上宣称，在金融危机开始时，曾经接受的现代宏观经济学教育是种“严重的障碍”，因为央行不得不从保持物价稳定“换档”到保证金融稳定。

　　现代宏观经济学家担心商品和服务的价格，但忽略了资产的价格。这部分是由于他们对金融市场过于信任。如果资产价格能反映经济的基本元素，那为何不仅仅根据基本元素制造模型，忽略它们笼罩在华尔街上的阴影呢？

　　此外，这也是由于他们对金融系统的内部运作毫无兴趣。哥伦比亚大学巴纳德学院的Perry Mehrling写道 “从哲学的角度来说”，经济学家是物质主义者，对他们来说，“一袋袋小麦比一堆堆债券重要多了”。金融只是一层面纱，遮盖了真正重要的实质。就如诗中所说，“付款承诺/非衣非食”【1】。

　　因而，在许多宏观经济模型中，资不抵债不可能发生；象银行这样的金融中介机构，通常不存在资不抵债；无论公司是通过股权融资还是债券融资并无区别。比如，英格兰银行的“动态随机一般均衡”模型，甚至不曾尝试将银行这样的中介加入进来。“所以，这一模型对那些金融中介在其中起关键作用的问题来说，并无直接用处。”该模型的设计者承认。不幸的是，现在的危机正属于这类问题。

　　银行的模型设计者仍然说他们偏爱通过为某种目的设计的特定模型来研究金融。最著名的一种由伯南克先生以及纽约大学的Mark Gertler首先提出。遗憾的是，据普林斯顿的Markus Brunnermeier说，包含了金融市场的复杂情况的模型“会变得非常难以处理”，他本人处理的这类难题比谁都多。经济学家往往因便利而非信服做出选择。

　　然而，便利会让人不可自拔。经济学家可能为自己的模型着迷，自我愚弄说这种模型的遗漏之处无关紧要。比如，假设市场是“完全的”非常方便——即目前，对于任何商品，不论什么时间、发生了什么事情，总存在一个价格。当今世界，人们永远可以以现行利率任意借款，也可以以现行利率任意卖出。

　　危机前，许多银行及影子银行做出类似的假设。他们认为，如果银行的需要出现的话，自己便一直能对短期债务进行展期或出售按揭抵押债券。金融危机不啻是对这两个假设的无情嘲笑。资金枯竭了，市场也萎缩了。在对金融危机的详细剖析中，Brunnermeier揭示了这两个约束条件是如何互为因果，产生出“流通性漩涡”的。

　　紧随其后的就是现金狂热，投资银行出售任何能够出售的东西，商业银行收储准备金，公司排队贷款。凯恩斯会将其解读为流动性偏好的极端爆发，Paul Davidson这样说道，他关于凯恩斯大师的传记才刚刚出版，加入了新的后记。但当代经济学偏偏忘了这个术语。

　　财政互搏

　　体现在“动态随机一般均衡”模型中的主流宏观经济学，对于金融危机的源头来说，是极为糟糕的引导者，使其拥趸对各种金融危机的各种症状毫无准备。它对复苏的最好方式能提供什么真知灼见吗？

　　在危机的开始几个月，宏观经济学家对联邦储备和其他央行树立了极大信心。2007年夏，8月流动性危机开始前几周，著名学术经济学家暨当时联储董事之一Frederic Mishkin，在怀俄明州杰克逊洞堪萨斯城联邦储备银行的年度学术研讨会上，发表讲话，给人们吃了颗定心丸。他宣布了联储FRB/US模型的模拟结论，根据这一基准模型，即使房价在其后两年下跌五分之一，经济下滑也只会使GDP减少0.25%，失业率也仅会上升0.1个百分点。原因在于联储将会做出激进的反应，但他所谓的激进反应只不过是联邦基金利率会下调1个百分点。他总结道，央行有各种工具可将损失减少到可承受的程度。

　　在Frederic Mishkin的讲话后，联储已将关键利率从5%减少到仅仅0-0.25%。其惯用的武器此次效用不足，动摇了经济学家对货币政策的信心。遗憾的是，他们对下一步措施存在不可调和的分歧。

　　Krugman先生及其他人支持大胆的财政扩张，他们的逻辑源于凯恩斯及与其同时的Richard Kahn。Kahn指出，如果支出在经济中反复循环，从而刺激本有可能闲置的资源，那么花在公共事业上的一美元可能产生多于一美元的产出。

　　目前经济学家的分歧在于这一乘数将会有多大。Barro先生认为奥巴马的经济顾问委员会对这一乘数的估值大得荒谬。Lucas先生称他们“蹩脚的经济学家”，只是设法证明奥巴马先生的赤字预算有正当理由。但经济学家并非真的沉溺于研究这个问题。经Krugman统计，1985到2000年间，国家经济研究局发表了7000份左右论文，只有5份在题目或摘要中提到了财政政策。

　　这些公开的口水战是否会损害宏观经济？哈佛的Greg Mankiw回忆起20世纪80年代的Robert Solow 和Mr Lucas间怒气冲冲的论战，两人都是知名经济学家，却都不重视对方的观点。他写道，这次尖刻的互相指责和酒吧拳击赛颇有相似之处，极为引人注目。但他认为这也使更年轻的学者困惑担忧，因而远离这些宏观经济争论。

　　Greg Mankiw在文中提到，20实际90年代后的知识界和平时代本应是宏观经济的黄金年代。但半咸共识似乎也把学生们排除在外。David Colander曾经二度对参与美国一流博士项目的经济学家进行调查，他们的观点显示，宏观经济学通常是最不受欢迎的课题。“你能从宏观经济中学到什么？” Colander问一群芝加哥学生。“你做过动态随机一般均衡模型试验吗？”“我们学了很多那样的垃圾，”一学生这样回答。

　　一个模型打败另一个模型

　　尽管宏观经济基准模型并非垃圾，但受制于某些明显的缺陷，如完全市场假设或无缺陷金融等。实际上，因为这些缺陷非常明显，经济学家都清醒意识到它们。象Buiter这样的批评家并没告诉他们什么新鲜事。经济学家能够做到也确实做到了远离这一基准。这事实上也是他们的论文得以发表的原因。因而越来越多的先进模型加入了一二个金融缺陷。象Brunnermeier先生这样的经济学家试图将危机的小黑板模型应用到更大的宏观经济框架下。

　　但基准仍至关重要。它使得经济学家对于分析简化的直觉得以形式化。它是理论学家研究的起点，而他们在思维远足后又重归于此。几乎没有经济学家真的相信所有这些假设，但也没人从其他地方开始研究。

　　可惜的是，正是这种原始模型，而非它们的尖端衍生品，通常对全世界范围内的政策和实践有最大的影响。部分是由于这些首要原则已经历了足够长的时间，已经从学术界进入了决策圈。正如凯恩斯指出的，对实际操作者影响最大的经济学家是那些逝者，他们的原始构想穿越了学术界，引起更为广泛的讨论。

　　这些基本模型也因其简单而意义重大。面临现实世界喧嚣繁芜的困惑，决策者通常求助于最高原则和最广泛的假设。更特定、琐碎的理论往往不够通用。它们在各自所欲解释的问题上颇有见地，但却无法超出这一范畴。

　　经济学家是否应从其他地方重新开始？有些人这么认为。他们从被忽略的先知那里获得灵感，比如先人Minsky，他承认“真正”的经济与金融不可分割。有些先知不是因为其表述内容被忽略，而是因为他们的表述方式。目前经济学家对内容更包容，却更执着于形式。他们更关心各自的技术而非理论；只有在他们能将某些理论转化成模型时，他们才会相信这些理论。

　　因此，Colander先生认为经济学家需要技术革命。他建议用计算机模拟各经济体，而非利用经济学家的推演能力，手动制造模型。。在此类研究中，经济学家指定简单的经验法制，据此法则，各经济主体交互作用，然后让计算机运作，进行反复模拟，揭示何种意料之外的模式可能会出现。如果他正确的话，宏观经济学家，就如起死回生的银行一样，必须一笔勾销他们的过去的智力投资，方能再度取得进展。

　　与他相反，Krugman先生认为改革更可能从内部产生。他承认，凯恩斯是“站在巅峰的内部人士”，他懂得他所摧毁的理论，因为他曾经也是这些理论的信徒。同时，他又说，宏观经济应转向耐心细致的实证基础工作，记录过去及现在的危机，希冀日后会有一种全新的理论能解释这一切。

　　宏观经济始于凯恩斯，但这个词直到1945年才出现在杂志上一篇由Jacob Marschak所写的文章上。他回顾了宏观经济学对商业周期逐渐加深的理解，与其他科学进行对比。例如地震学通过更好的工具、改进的各色理论以及更为频繁的地震取得进展。就经济学而言，Marschak总结说，“经济地震做的工作最多”。

　　经济学家已有四分之一世纪未经历巨震。大稳健，尽管这段时间有这样一个名字，对伟大的宏观经济却并无助益。由于过去两年的震撼性事件，现宏观经济学家的威望已在谷底，但他们这一学科潜力无穷。使他们产生分歧的一系列激烈争论对他们的信誉是一大打击，但也许能刺激他们的创造力。

　　【1】“promises of payment/Are neither food nor raiment”语出自Thomas Love Peacock创作于1825年的一首名为Pan in Town的讽刺诗(1837年5月首次出版)。描写的是1825年经济危机时的场景，Pan代表"the god of panic"。

本文的英文原文

　　The other-worldly philosophers

　　The state of economics

　　The other-worldly philosophers

　　Jul 16th 2009

　　From The Economist print edition

　　Although the crisis has exposed bitter divisions among economists, it could still be good for economics. Our first article looks at the turmoil among macroeconomists. Our second (see article) examines the foundations of financial economics

　　ROBERT LUCAS, one of the greatest macroeconomists of his generation, and his followers are “making ancient and basic analytical errors all over the place”. Harvard’s Robert Barro, another towering figure in the discipline, is “making truly boneheaded arguments”. The past 30 years of macroeconomics training at American and British universities were a “costly waste of time”.

　　To the uninitiated, economics has always been a dismal science. But all these attacks come from within the guild: from Brad DeLong of the University of California, Berkeley; Paul Krugman of Princeton and the New York Times; and Willem Buiter of the London School of Economics (LSE), respectively. The macroeconomic crisis of the past two years is also provoking a crisis of confidence in macroeconomics. In the last of his Lionel Robbins lectures at the LSE on June 10th, Mr Krugman feared that most macroeconomics of the past 30 years was “spectacularly useless at best, and positively harmful at worst”.

　　 These internal critics argue that economists missed the origins of the crisis; failed to appreciate its worst symptoms; and cannot now agree about the cure. In other words, economists misread the economy on the way up, misread it on the way down and now mistake the right way out.

　　On the way up, macroeconomists were not wholly complacent. Many of them thought the housing bubble would pop or the dollar would fall. But they did not expect the financial system to break. Even after the seizure in interbank markets in August 2007, macroeconomists misread the danger. Most were quite sanguine about the prospect of Lehman Brothers going bust in September 2008.

　　Nor can economists now agree on the best way to resolve the crisis. They mostly overestimated the power of routine monetary policy (ie, central-bank purchases of government bills) to restore prosperity. Some now dismiss the power of fiscal policy (ie, government sales of its securities) to do the same. Others advocate it with passionate intensity.

　　Among the passionate are Mr DeLong and Mr Krugman. They turn for inspiration to Depression-era texts, especially the writings of John Maynard Keynes, and forgotten mavericks, such as Hyman Minsky. In the humanities this would count as routine scholarship. But to many high-tech economists it is a bit undignified. Real scientists, after all, do not leaf through Newton’s “Principia Mathematica” to solve contemporary problems in physics.

　　They accuse economists like Mr DeLong and Mr Krugman of falling back on antiquated Keynesian doctrines—as if nothing had been learned in the past 70 years. Messrs DeLong and Krugman, in turn, accuse economists like Mr Lucas of not falling back on Keynesian economics—as if everything had been forgotten over the past 70 years. For Mr Krugman, we are living through a “Dark Age of macroeconomics”, in which the wisdom of the ancients has been lost.

　　What was this wisdom, and how was it forgotten? The history of macroeconomics begins in intellectual struggle. Keynes wrote the “General Theory of Employment, Interest and Money”, which was published in 1936, in an “unnecessarily controversial tone”, according to some readers. But it was a controversy the author had waged in his own mind. He saw the book as a “struggle of escape from habitual modes of thought” he had inherited from his classical predecessors.

　　That classical mode of thought held that full employment would prevail, because supply created its own demand. In a classical economy, whatever people earn is either spent or saved; and whatever is saved is invested in capital projects. Nothing is hoarded, nothing lies idle.

　　Keynes appreciated the classical model’s elegance and consistency, virtues economists still crave. But that did not stop him demolishing it. In his scheme, investment was governed by the animal spirits of entrepreneurs, facing an imponderable future. The same uncertainty gave savers a reason to hoard their wealth in liquid assets, like money, rather than committing it to new capital projects. This liquidity-preference, as Keynes called it, governed the price of financial securities and hence the rate of interest. If animal spirits flagged or liquidity-preference surged, the pace of investment would falter, with no obvious market force to restore it. Demand would fall short of supply, leaving willing workers on the shelf. It fell to governments to revive demand, by cutting interest rates if possible or by public works if necessary.

　　The Keynesian task of “demand management” outlived the Depression, becoming a routine duty of governments. They were aided by economic advisers, who built working models of the economy, quantifying the key relationships. For almost three decades after the second world war these advisers seemed to know what they were doing, guided by an apparent trade-off between inflation and unemployment. But their credibility did not survive the oil-price shocks of the 1970s. These condemned Western economies to “stagflation”, a baffling combination of unemployment and inflation, which the Keynesian consensus grasped poorly and failed to prevent.

　　The Federal Reserve, led by Paul Volcker, eventually defeated American inflation in the early 1980s, albeit at a grievous cost to employment. But victory did not restore the intellectual peace. Macroeconomists split into two camps, drawing opposite lessons from the episode.

　　The purists, known as “freshwater” economists because of the lakeside universities where they happened to congregate, blamed stagflation on restless central bankers trying to do too much. They started from the classical assumption that markets cleared, leaving no unsold goods or unemployed workers. Efforts by policymakers to smooth the economy’s natural ups and downs did more harm than good.

　　Illustration by Brett Ryder

　　America’s coastal universities housed most of the other lot, “saltwater” pragmatists. To them, the double-digit unemployment that accompanied Mr Volcker’s assault on inflation was proof enough that markets could malfunction. Wages might fail to adjust, and prices might stick. This grit in the economic machine justified some meddling by policymakers.

　　Mr Volcker’s recession bottomed out in 1982. Nothing like it was seen again until last year. In the intervening quarter-century of tranquillity, macroeconomics also recovered its composure. The opposing schools of thought converged. The freshwater economists accepted a saltier view of policymaking. Their opponents adopted a more freshwater style of modelmaking. You might call the new synthesis brackish macroeconomics.

　　Pinches of salt

　　Brackish macroeconomics flowed from universities into central banks. It underlay the doctrine of inflation-targeting embraced in New Zealand, Canada, Britain, Sweden and several emerging markets, such as Turkey. Ben Bernanke, chairman of the Fed since 2006, is a renowned contributor to brackish economics.

　　For about a decade before the crisis, macroeconomists once again appeared to know what they were doing. Their thinking was embodied in a new genre of working models of the economy, called “dynamic stochastic general equilibrium” (DSGE) models. These helped guide deliberations at several central banks.

　　Mr Buiter, who helped set interest rates at the Bank of England from 1997 to 2000, believes the latest academic theories had a profound influence there. He now thinks this influence was baleful. On his blog, Mr Buiter argues that a training in modern macroeconomics was a “severe handicap” at the onset of the financial crisis, when the central bank had to “switch gears” from preserving price stability to safeguarding financial stability.

　　Modern macroeconomists worried about the prices of goods and services, but neglected the prices of assets. This was partly because they had too much faith in financial markets. If asset prices reflect economic fundamentals, why not just model the fundamentals, ignoring the shadow they cast on Wall Street?

　　It was also because they had too little interest in the inner workings of the financial system. “Philosophically speaking,” writes Perry Mehrling of Barnard College, Columbia University, economists are “materialists” for whom “bags of wheat are more important than stacks of bonds.” Finance is a veil, obscuring what really matters. As a poet once said, “promises of payment/Are neither food nor raiment”.

　　In many macroeconomic models, therefore, insolvencies cannot occur. Financial intermediaries, like banks, often don’t exist. And whether firms finance themselves with equity or debt is a matter of indifference. The Bank of England’s DSGE model, for example, does not even try to incorporate financial middlemen, such as banks. “The model is not, therefore, directly useful for issues where financial intermediation is of first-order importance,” its designers admit. The present crisis is, unfortunately, one of those issues.

　　The bank’s modellers go on to say that they prefer to study finance with specialised models designed for that purpose. One of the most prominent was, in fact, pioneered by Mr Bernanke, with Mark Gertler of New York University. Unfortunately, models that include such financial-market complications “can be very difficult to handle,” according to Markus Brunnermeier of Princeton, who has handled more of these difficulties than most. Convenience, not conviction, often dictates the choices economists make.

　　Convenience, however, is addictive. Economists can become seduced by their models, fooling themselves that what the model leaves out does not matter. It is, for example, often convenient to assume that markets are “complete”—that a price exists today, for every good, at every date, in every contingency. In this world, you can always borrow as much as you want at the going rate, and you can always sell as much as you want at the going rate.

　　Before the crisis, many banks and shadow banks made similar assumptions. They believed they could always roll over their short-term debts or sell their mortgage-backed securities, if the need arose. The financial crisis made a mockery of both assumptions. Funds dried up, and markets thinned out. In his anatomy of the crisis Mr Brunnermeier shows how both of these constraints fed on each other, producing a “liquidity spiral”.

　　What followed was a furious dash for cash, as investment banks sold whatever they could, commercial banks hoarded reserves and firms drew on lines of credit. Keynes would have interpreted this as an extreme outbreak of liquidity-preference, says Paul Davidson, whose biography of the master has just been republished with a new afterword. But contemporary economics had all but forgotten the term.

　　Fiscal fisticuffs

　　The mainstream macroeconomics embodied in DSGE models was a poor guide to the origins of the financial crisis, and left its followers unprepared for the symptoms. Does it offer any insight into the best means of recovery?

　　In the first months of the crisis, macroeconomists reposed great faith in the powers of the Fed and other central banks. In the summer of 2007, a few weeks after the August liquidity crisis began, Frederic Mishkin, a distinguished academic economist and then a governor of the Fed, gave a reassuring talk at the Federal Reserve Bank of Kansas City’s annual symposium in Jackson Hole, Wyoming. He presented the results of simulations from the Fed’s FRB/US model. Even if house prices fell by a fifth in the next two years, the slump would knock only 0.25% off GDP, according to his benchmark model, and add only a tenth of a percentage point to the unemployment rate. The reason was that the Fed would respond “aggressively”, by which he meant a cut in the federal funds rate of just one percentage point. He concluded that the central bank had the tools to contain the damage at a “manageable level”.

　　Since his presentation, the Fed has cut its key rate by five percentage points to a mere 0-0.25%. Its conventional weapons have proved insufficient to the task. This has shaken economists’ faith in monetary policy. Unfortunately, they are also horribly divided about what comes next.

　　Mr Krugman and others advocate a bold fiscal expansion, borrowing their logic from Keynes and his contemporary, Richard Kahn. Kahn pointed out that a dollar spent on public works might generate more than a dollar of output if the spending circulated repeatedly through the economy, stimulating resources that might otherwise have lain idle.

　　Today’s economists disagree over the size of this multiplier. Mr Barro thinks the estimates of Barack Obama’s Council of Economic Advisors are absurdly large. Mr Lucas calls them “schlock economics”, contrived to justify Mr Obama’s projections for the budget deficit. But economists are not exactly drowning in research on this question. Mr Krugman calculates that of the 7,000 or so papers published by the National Bureau of Economic Research between 1985 and 2000, only five mentioned fiscal policy in their title or abstract.

　　Illustration by Brett Ryder

　　Do these public spats damage macroeconomics? Greg Mankiw, of Harvard, recalls the angry exchanges in the 1980s between Robert Solow and Mr Lucas—both eminent economists who could not take each other seriously. This vitriol, he writes, attracted attention, much like a bar-room fist-fight. But he thinks it also dismayed younger scholars, who gave these macroeconomic disputes a wide berth.

　　By this account, the period of intellectual peace that followed in the 1990s should have been a golden age for macroeconomics. But the brackish consensus also seems to leave students cold. According to David Colander, who has twice surveyed the opinions of economists in the best American PhD programmes, macroeconomics is often the least popular class. “What did you learn in macro?” Mr Colander asked a group of Chicago students. “Did you do the dynamic stochastic general equilibrium model?” “We learned a lot of junk like that,” one replied.

　　It takes a model to beat a model

　　The benchmark macroeconomic model, though not junk, suffers from some obvious flaws, such as the assumption of complete markets or frictionless finance. Indeed, because these flaws are obvious, economists are well aware of them. Critics like Mr Buiter are not telling them anything new. Economists can and do depart from the benchmark. That, indeed, is how they get published. Thus a growing number of cutting-edge models incorporate one or two financial frictions. And economists like Mr Brunnermeier are trying to fit their small, “blackboard” models of the crisis into a larger macroeconomic frame.

　　But the benchmark still matters. It formalises economists’ gut instincts about where the best analytical cuts lie. It is the starting point to which the theorist returns after every ingenious excursion. Few economists really believe all its assumptions, but few would rather start anywhere else.

　　Unfortunately, it is these primitive models, rather than their sophisticated descendants, that often exert the most influence over the world of policy and practice. This is partly because these first principles endure long enough to find their way from academia into policymaking circles. As Keynes pointed out, the economists who most influence practical men of action are the defunct ones whose scribblings have had time to percolate from the seminar room to wider conversations.

　　These basic models are also influential because of their simplicity. Faced with the “blooming, buzzing confusion” of the real world, policymakers often fall back on the highest-order principles and the broadest presumptions. More specific, nuanced theories are often less versatile. They shed light on whatever they were designed to explain, but little beyond.

　　Would economists be better off starting from somewhere else? Some think so. They draw inspiration from neglected prophets, like Minsky, who recognised that the “real” economy was inseparable from the financial. Such prophets were neglected not for what they said, but for the way they said it. Today’s economists tend to be open-minded about content, but doctrinaire about form. They are more wedded to their techniques than to their theories. They will believe something when they can model it.

　　Mr Colander, therefore, thinks economics requires a revolution in technique. Instead of solving models “by hand”, using economists’ powers of deduction, he proposes simulating economies on the computer. In this line of research, the economist specifies simple rules of thumb by which agents interact with each other, and then lets the computer go to work, grinding out repeated simulations to reveal what kind of unforeseen patterns might emerge. If he is right, then macroeconomists, like zombie banks, must write off many of their past intellectual investments before they can make progress again.

　　Mr Krugman, by contrast, thinks reform is more likely to come from within. Keynes, he observes, was a “consummate insider”, who understood the theory he was demolishing precisely because he was once convinced by it. In the meantime, he says, macroeconomists should turn to patient empirical spadework, documenting crises past and present, in the hope that a fresh theory might later make sense of it all.

　　Macroeconomics began with Keynes, but the word did not appear in the journals until 1945, in an article by Jacob Marschak. He reviewed the profession’s growing understanding of the business cycle, making an analogy with other sciences. Seismology, for example, makes progress through better instruments, improved theories or more frequent earthquakes. In the case of economics, Marschak concluded, “the earthquakes did most of the job.”

　　Economists were deprived of earthquakes for a quarter of a century. The Great Moderation, as this period was called, was not conducive to great macroeconomics. Thanks to the seismic events of the past two years, the prestige of macroeconomists is low, but the potential of their subject is much greater. The furious rows that divide them are a blow to their credibility, but may prove to be a spur to creativity.