Category Archives: Federal Reserve

Fundamental Disorientations at the Federal Reserve Bank and the National Bureau of Economic Research

We have arranged this Topic into four parts:

  • Part I: The Disorientations of Macroeconomists
  • Part II: Principles and Precepts of Analysis
  • Part III: A New Textbook, Lonergan’s Macroeconomic Dynamics: A Textbook in Circulation Analysis
  • Part IV Comments on The Federal Reserve’s Current Framework For Monetary Policy: A Review and Assessment, by Janice C. Eberly, James H. Stock, and Jonathan H Wright.

Part I: The Disorientations of Macroeconomists

One cannot help but admire and be grateful to the Federal Reserve Bank for its Flow of Funds matrices and the National Bureau of Economic Research for its GDP tables.  Great information, well done!  However, the Fed, the NBER, and the proponents of the DSGE methodology suffer from fundamental disorientations. The NBER’s descriptive, commonsense, national-income accounting must integrate the Fed’s data on credit and to be recast to provide an explanatory systematization of interdependent flows of products and money.  Devotees must reorient themselves.  (Continue reading)

Letter to The Bureau of Economic Analysis

The Functional Macroeconomic Dynamics Collaborative

Website: Bernard Lonergan’s Functional Macroeconomic Dynamics

https://functionalmacroeconomics.com

functionalmacroeconomics@gmail.com

 

Brian C. Moyer, Director

Bureau of Economic Analysis (BEA)

4600 Silver Hill Road

Washington, DC 20233

Dear Mr. Moyer,

Presently the Bureau of Economic Analysis (BEA) publishes three general versions of the National Income and Product Accounts (NIPA).

  1. Gross Domestic Product, Current $
  2. Gross Domestic Income by Type of Income; National Income by Type of Income; and, National Income by Sector …; Current $)
  3. Gross Value Added by Sector; Current $)

Would it be possible for the BEA staff to develop a fourth which would be explanatory of the production-and-exchange process? Continue reading

The IS-LM, AD-AS, and Phillips Curve Models

In this section, we are contrasting familiar textbook models of macrostatic equilibrium, with Lonergan’s explanatory theory of macrodynamic equilibrium.  We are contrasting a macrostatic toolkit with a purely relational field theory of macroeconomic dynamics. Lonergan discovered  a theory which is more fundamental than the traditional wisdom based upon human psychology and purported endogenous reactions to external forces.  His Functional Macroeconomic Dynamics is a set of relationships between n objects, a set of intelligible relations linking what is implicitly defined by the relations themselves, a set of relational forms wherein the form of any element is known through its relations to all other elements.  His field theory is a single explanatory unity; it is purely relational, completely general, and universally applicable to every configuration in any instance. (Continue reading)

 

 

Recommended Supplementary Reading for “Romer in Lonergan’s Framework”

Recommended reading for context of Romer’s and Lonergan’s achievements in economics:

Shute, Michael (2009) Lonergan’s Discovery of the Science of Economics, (Toronto, University of Toronto Press Incorporated 2010 [Shute, 2009] Continue reading

Paul Romer’s “Endogenous Technological Change” in Bernard Lonergan’s Framework

Paul Michael Romer is a University Professor at New York University and the co-recipient of the 2018 Nobel Memorial Prize in Economics Sciences.

Both Paul Romer and Bernard Lonergan provided scientific explanations of how the economic process can and should expand. (Continue reading)

New Foundations in 10 Minutes

New foundations for a new science of macroeconomics are grounded in

  • a scientific, dynamic heuristic
  • the technique of implicit definition
  • precise, purely relational, analytical distinctions between fundamental terms representing functional flows of products and money
  • the functional interrelations among these interdependent, mutually defining, explanatory functional flows

Continue reading

Textbook Flaws and Deficiencies

The popular textbooks of Macroeconomics – by N Gregory Mankiw, Paul Krugman and Robin Wells, Olivier Blanchard, Andrew B. Abel and Ben S. Bernanke, William J. Baumol and Alan S. Blinder – suffer in common from several flaws.  Our subheadings immediately below and the pointers thereafter point out flaws and deficiencies in textbooks commonly used in higher education. Though the treatments in this section are not exhaustive, they are sufficiently provocative; they should stimulate careful scrutiny of, and skepticism regarding, many traditional and conventional tenets.  Finally, though the treatments in this section are relatively brief and often primarily referential, there is a lot of ground to cover; so, we will underline and publish as time allows.

  1. This Introduction
  2. The nature of the current, purely dynamic economic process
  3. Scientific macroeconomics explains rather than merely describes
  4. A theory of macroeconomics must be independent of human psychology and anthropology
  5. The author of a textbook must employ a scientific and dynamic heuristic
  6. Real Analysis (read more)