More on the Missing Macroeconomists

My recent post bemoaning the “missing macroeconomists” in today’s policy debate yielded a number of very insightful responses. I received two particularly interesting missives from two of the brightest stars in macroeconomics.

First, Princeton’s Ricardo Reis added a new explanation for the missing macroeconomists:

Macroeconomics has taken a turn towards theory in the last 10-15 years. Most young macroeconomists are more comfortable with proving theorems than with getting their hands on any data or speculating on current events.

Partly, this is due to the macroeconomy being quite boring in the last 10-15 years of prosperity. Most young PhD’s with an interest in the world’s problems have gone to work in applied micro (like you) or in development, where the real-world questions seem more pressing.

And another part is due to a change in the structure of the older members of the profession. As economists have become more respected in policy circles, many practical macroeconomists have left for policy work. When Bernanke, Blinder, Mankiw, and many others decided to spend time in D.C., they left the control of the top journals and the tenure committees in the hands of their more theory-inclined colleagues. Young people were quick to catch on to who was in charge, and they became more theoretical.

Chicago’s Erik Hurst wanted to let me know: “I found the missing macroeconomists.” To his eye, “the initial ‘shock’ to the economy was a finance shock,” and so, “they just happen to be working undercover as ‘finance’ economists.”

To prove his point, Erik suggested a really useful (and slightly Chicago-centric) reading list:

1. David Greenlaw, Jan Hatzius, Anil Kashyap, and Hyun Song Shin, “Leveraged Losses: Lessons from the Mortgage Market Meltdown” (also suggested by Romain Wacziarg).

2. Atif Mian and Amir Sufi, “The Consequences of Mortgage Credit Expansion: Evidence from the 2007 Mortgage Default Crisis.”

3. Benjamin Keys, Tanmoy Mukherjee, Amit Seru and Vikrant Vig, “Did Securitization Lead to Lax Screening? Evidence from Subprime Loans 2001-2006.”

4. Carmen Reinhart and Ken Rogoff, “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises” (ungated version here).

Erik has also been quite vocal on the likely consequences for consumption: See more in an interview, which aired last week on NBC Nightly News.

And Doug Elmendorf, back from vacation, adds his $0.02, arguing for a role for specialization:

I agree with you that our profession has been slow to react to events. However, I think the principal reason is one you did not include on your list:

Professors are generally people with the inclination to think long and deeply and carefully about specific problems, not people with the inclination to take a few general principles and wade into a complex mess of problems changing daily. Thus, professors tend to be good at developing fundamental new truths but not at offering practical policy advice. On the bright side, that leaves a lot of running room for policy-oriented economists like me! On the dark side, that means that economists are often under the streetlight rather than closer to where their keys might be. This problem may be especially acute when the problems are new and hard. The profession took a decade, perhaps, before we got our minds around stagflation.

For those who are after a more digestible reading list, the always-excellent vox blog has included a number of excellent crisis-related posts from Willem Buiter, Stephen Cecchetti, Richard Portes, Carmen Reinhart, and others.


Justin, I was taught by a rather brilliant macro-economist at the University of Iowa back in the '80s who told me that most of the interesting theories were micro, while most of the interesting questions were macro--leading folks like him to turn to pure mathematics.

Justin Wolfers

The ungated version of Reinhart and Rogoff is available here:



4. Carmen Reinhart and Ken Rogoff, “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises” (ungated version here).

Does 'ungated' mean free full version? If so, where is it again (that phrase not hyperlinked)?


Good two articles, and informative comments. Found a few more sites to add to my econ feeds, and a few more names to lookout for on publications. Thanks.


I'd agree with Reis' assertion that many potential macroeconomists opt to go into applied micro or development. As a current econ major, I can say for myself and the majority of my classmates that this is the case.

I don't know if it's actually due to the prosperity that has been enjoyed in my lifetime, but I find macro to be as dull as turds. I hate talking/thinking about macro in classes, and after I finish my intermediate theory course this semester my plan is to never look at it again. This isn't to say I have no interest in the macroeconomy - I try to pay attention to major events, and I even read a fair amount of commentary related to them. I'm just not interested in understanding more than the basics of why it happens.

Not to mention the fact that macro seems incredibly bound to one topic - the interplay of national and international economies - while micro can be applied to anything I want it to (a lesson I learned from Freakonomics, not coincidentally). My options in micro are far less limited - if I decide later on that I don't want to be an economist, but instead a sociologist, or a chemist, or a painter, my time spent studying micro will be easier to justify than my time spent studying macro.

This seems to apply to most of my peers as well. Either they, like me, have no interest in macro, or if they do, what they're interested in is business. They want to be MBAs, not theoretical macroeconomists.



Hate to say it, but I think "Freakonomics" has a lot to do with it. Levitt was a sexy guy in academic circles before he hit the "real world" mainstream. A lot of students (including myself) went into the business to do cool work that we thought was fun (in addition to important). Macro was boring; applied micro and development was cool. We could use sexy instruments, neat identification strategies, cutting-edge field experiments, etc. And, best of all, it was all reduced-form, so we didn't have to learn programming, etc.


I'm seconding Bryon.


I'm with Erik Hurst- young talent is entering the world of 'finance', where they can make big bucks- hopefully there will be older, wiser macroecons who can provide a public service and help regulate the jaws-sized investment banks

Punditus Maximus

I'd posit a darker explanation as well -- in a world in which Dr. Mankiw's title has not changed from "economist" to "paid hack," the concept of a public macroeconomist has been massively devalued. Serious people may not be willing to get into the business.

Cyril Morong

It seems like part of our problem right now is the potential for stagflation. With oil and food prices rising, things are a little like the 1970s. Macro policies usually are worked on the demand side. But supply side shocks are harder to deal with and maybe suggested solutions are not as forthcoming because of this. Yes, part of the problem right now is on the demand side. People's houses are worth less, so if they are not as wealthy, they will spend less. The uncertainties about credit will make investment harder, another demand side issue. If it were only a demand side issue, it would not be as hard to deal with. But if the FED increases the money supply and reduces interest rates while we are suffering a supply shock, it will just create more inflation. The CPI was up 4.1% last year, already well above what is considered price stability. I think macro economists don't have many good answers on how to deal with stagflation. There may not be any.



Another reason is that public policy is not very attractive to many economists, because you make yourself quite vulnerable to criticism and attacks from people who have very preconceived opinions about the economy and economic policy. See for example one of the previous comments calling Greg Mankiw a "paid hack", presumably because Greg Mankiw doesn't satisfy the commentators own fantasies about economic policy. Why should I as an economist do public policy when the alternatives are theory or fields where I am not the subject of attacks (or attacks masquerading as criticism).