Macroscopic

Over the summer I began research for my MPhil thesis, which will seek to explore how introducing inequality in wealth and access to financial markets affects the monetary policy prescriptions of the standard workhorse model of modern macroeconomics used by policymakers in the central banks: the so called ``New Keynesian’’ model. My interest in this area stems from two strands of the modern macroeconomic literature, which I have come across at different points during my time as an Economics student to date. The first such strand is the "heterogeneous agents’’ macroeconomic literature, which began with seminal contributions by Aiyagari (1994) and Hugget (1993). Before this literature, macroeconomic models had tended to feature a ‘’representative agent’’. Solving the optimising problem of the representative agent was effectively finding out the conditions of rational behaviour for everyone in the economy, which people concerned about maximising their standard of living subject...

I have long been fascinated by the methodological debates in economics, particularly those in macro (which have until recently exclusively dominated debate since Keynes). This was in fact how I became interested in economics in the first place, via perhaps the classic debate in macroeconomics (at least in popular culture) - the Keynes vs. Hayek/monetarist debate of the 1930s in the context of the Great Depression. Speaking from my own experience, it seems to me that these sorts of debates appear to capture the imagination of students new to a subject, and so there is certainly a place for them in economic pedagogic. I found the same to be true studying political theory, where first year students are usually introduced to political concepts through the prism of age-old grand debates between Liberalism, Socialism and Conservatism. At present, since the Great Recession in 2008, the flavour of the month has very much been the methodological lambasting of economics, and macroeconomi...