He writes,

The combination of representative-agent modeling and utility-based “microfoundations” was always a game of intellectual Three-Card Monte. Why do you ask? Why don’t we fund sociologists to investigate for what reasons–other than being almost guaranteed to produce conclusions ideologically-pleasing to some–it has flourished for a generation in spite of having no empirical support and no theoretical coherence?

Pointer from Mark Thoma.

About the very same methodology, Olivier Blanchard famously wrote, “The state of macro is good.” Instead, Brad DeLong has stumbled over the truth, but will he pick himself up as if nothing happened?

We have one historical macroeconomic path, and we have many interpretive frameworks from which to choose. We can reconcile very disparate frameworks to the observed data. How shall we choose among frameworks?

The “microfoundations” criteria, whether used by New Classicals or New Keynesians, are silly. The macro-economy is not one owner-worker employed (or not) in a single GDP factory.

Still, there is something to be said for using microeconomic principles to guide your interpretive framework in macroeconomics. Every economist does so. We just diverge in which microeconomic principles we use as focal points.

In my view, the workhorse AS-AD model is already too aggregated. I am convinced by neither DeLong’s Wicksellian version nor Sumner’s Market Monetarist version. Instead, A short version of my macro framework is here. A longer version is in progress.