Kartik Athreya, via email, responds to my review of his book, which is gratifying given the time I spent on it! Here is his response:
Thanks for the detailed and consistently interesting review of my book. I think you did a nice job in capturing many of the points I wanted to cover. First, you may well be right in that some prior exposure to economics will make the book an easier read. In the preface of the book, I say as much. I still hope, though, that via its use of (largely) non-technical English, the set of serious readers interested in the M.O. of modern macro (which I think is a large set of people) will learn “what we do and why we do it.”
This brings me to a main point I want to stress: In part 5 of your review, you suggest that the book is not ideal as a rebuttal of macro's critics, and a better book would have focused on this. That may well be true, but that wasn’t my aim. The majority of the book is nota rebuttal of critics, but instead a description of models and model classes used by mainstream macroeconomists, and why we like them. As I state at the outset (p. 2): "the goal of this book is to describe the workaday practice of macroeconomists...". On page 3, I state: "To the extent that my efforts leave readers persuaded of our generally held world view...so much the better. But even if they are not persuaded, at least the reader and critic will have a better sense of how the sausage is made." And on page 5, I stress again that "This book aims to describe why we do what we do and think what we think." These are not promises to show the reader what's wrong with every other approach. I simply do not know those other approaches well enough to provide any meaningful discussion of the particular failings of any of the myriad alternatives that currently lie at the fringe of the profession (on this point, many people whom I look up to take alternatives to mainstream macro (such as ABM) very seriously, so I do not feel “turfy” as your readers might infer from the “review-as-a-rebuttal” theme you maintain. The appropriate yardstick, therefore, that I’d like a lay-reader to use when judging the success of my effort is whether, at the end of the book, they have some feel for what we do.
Indeed, it is only indirectly that this book can serve the role of a rebuttal to critics of macro “method” anyway, and there too, incompletely: only Chapters 1 and 4 talk about methodology much, and here too, only to describe how we communicate with each other (Ch 1), and why we make some assumptions, and the costs therein (Ch 4). There is a lot of discussion in the book on the fact that perfect alternatives are not available, and we strike what might appear, especially to non-macroeconomists, to be Faustian bargains all the time. So when I describe the role I see for persuasion of the appropriateness of assumptions in macroeconomics, I would have included some important context on how such persuasion is disciplined—and this is key part of what is covered by the book in Ch. 1, where I describe the quite disciplined manner for "how we discuss research with each other" . (here’s a student relaying this idea: http://arambachan.blogspot.
com/2014/05/caveat-importance- of-models-in-macro.html ). So a reader of your blog can be forgiven for thinking that matters are purely subjective. They are not.
One thing I think your readers would have appreciated more focus on was the discussion in the book on the actual specific models(and their variants) that we most often use to come to conclusions about phenomena. This is the stuff of Chapter 5, and in a way, the heart of the book—as it talks about the nitty-gritty details of some major model classes (Growth models, Incomplete market models, Overlapping Generations models, etc.), and lessons that those models have for macroeconomists. This is where the rubber meets any sort of road, and readers will want to see this to be satisfied with any statement about “what we do.”
There are also oversights that seem relevant given the sometimes strong statements made in the review. One instance is the assertion that the book ignores coordination failures (and the work of Morris and Shin)--when in fact the book has a section in Chapter 5 (p. 228-231), and another passage (p. 269-272) that discusses this idea explicitly, and even talks about the example of how civil rights legislation in 1964 might have helped by coordinating expectations of others—especially those of non-minority groups. If such mechanisms are even a little relevant to the explanation of those colossal events in our history, it is surely is a massively consequential thing, relative to other places where the coordination idea is usually invoked. Similarly, there is also no direct mention of what is a major meme/theme in the book: modern macro is incomplete markets macro, with financial and labor markets being the ones most prone to dysfunction. It tackles poverty, inequality, and unemployment very directly, and in an empirically motivated manner. I want readers to know this. Again, this is the stuff of chapter 5. (for your readers, Ryan Decker notes this here:http://updatedpriors.blogspot.
com/2014/05/public-service- announcement-there-is.html and here: http://updatedpriors.blogspot. com/2014/05/modern-macro- without-math.html
This response to your review is getting nearly as long as your long review, which was nearly as long as my long book. So enough.
I greatly appreciate the detailed, critical-but-thoughtful, and in places, quite humorous, review of my book, and the serious effort you took to make it happen.