Macroeconomics — a view from the peanut gallery

Update: I run a more detailed version of the puzzle I find here in this post — some thoughts Brian Romanchuk helped to provoke. See also his trilogy of posts on this, starting here. See also C Trombley’s contribution here.

I Don’t Get Macro

Macroeconomics, by contrast, I just don’t get. I called this post “a view from the peanut gallery”, because I want to be clear that when it comes to macroeconomics I have only a distant, side-balcony, heavily-obscured view.

Example: ‘Transversality’

Here’s an example: the ‘transversality condition’ on government debt. Everyone talks about government debt — it’s always a big decider in elections. Your natural impulse is to go and see what macroeconomists have to say about it. But what you find when you do so is so bizarre it’s hard to know what to do with it.

Had we but world enough and time,

A Ponzi scheme would be just fine.

‘Heterodox’ Macro

What about ‘heterodox’ macro? The sort I’m most familiar with is ‘stock-flow consistent modelling’. I find that stuff quite useful for debunking certain misunderstandings people can have about debt (indeed I have had some): for instance the belief that if debt is always growing then a future default is inevitable. The mathematics is logical and elegant, with no wild assumptions about infinite lifespans and rational expectations, nor mysteries of subjective dollars, nor Tristram Shandy paradoxes. Instead you just trace flows around with the clarity found in electrical engineering or fluid dynamics models.

Lecturer in Philosophy, University of St. Andrews — personal website:

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