In New Classical theory, periods of declining employment - business cycle downturns - may be caused by an unexpected decline in aggregate demand, which leaves workers mistakenly holding out for nominal wages that exceed the new market-clearing level.
In the late 1960s, the New Classical economists saw the same weaknesses in the microfoundations of macroeconomics that have motivated me. They hated its lack of rigor. And they sacked it.
I think what Bob Shiller and I are doing is we're focusing on macroeconomics and the role of psychology in macroeconomics.
I would never have been a good reporter because I am not accurate regarding facts.
I've always been a macroeconomist. That's what I teach. And I guess that's what I've been concerned with ever since I've been very young.
Keynesian economics has always been needed.
My brother Carl became a physicist; I became an economist.
My father was a chemist on the Yale faculty, my mother a housewife.
Prior to the early 1960s, economic theorists rarely constructed models customized to capture unique institutions or specific market characteristics.
The failure of credit markets is one of the major reasons for underdevelopment.
The only way we are going to ameliorate pressing social needs is through public intervention.
The whole intention of empirical economics is to force theory down to Earth.
My mother, whose interest in chemistry was rather minimal, nevertheless went to graduate school in the subject and married my father, for whom it was as important as life itself.
My Swedish grandmother was the daughter of a dairy farmer who lived near Hedemora. My Swedish grandfather worked as a clerk for the Swedish railways in the Stockholm station.
Parents don't take a baby's temperature to decide whether the room is too warm; likewise, for global warming, we need a story that spurs us to do what is necessary.
The idea is that in any situation, people have a notion as to who they are and how they should behave. And if you don't behave according to your identity, you pay a cost.
When men do all the outside work, they contribute on average about 10 percent of housework. But as their share of outside work falls, their share of housework rises to no more than 37 percent.
When you give chief executives too much compensation in stock options, they concentrate too much on the stock price, and there is a perverse incentive to raise the stock price, particularly when the chief executive wants to exercise his own options.