The Human Action Podcast Roger Farmer Gives a Tour of Macroeconomics
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Jan 2, 2026 Roger Farmer, a macroeconomist known for his work on Keynes and Hayek, takes listeners on a fascinating journey through macroeconomic evolution. He explores the impact of significant events like the Great Depression and the 2008 crisis, emphasizing the need for his 'windy boat' metaphor over traditional economic models. Farmer discusses unemployment as a random walk, contrasting search theory with asset market fluctuations, and critiques both neoclassical and MMT viewpoints. His unique synthesis of ideas challenges listeners to rethink traditional economic narratives.
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Three Natural Experiments Reshaped Macro
- The Great Depression, stagflation, and the 2008 crisis were large natural experiments reshaping macroeconomics.
- These events forced economists to abandon simple pre-Keynesian price-theory views of self-equilibrating markets.
From Phillips Curve To Rational Expectations
- The Phillips Curve was grafted onto Keynesian models to form the neoclassical synthesis.
- Rational Expectations (Lucas) later formalized intertemporal coordination by agents forming beliefs about the future.
Windy Boat Instead Of Rocking Horse
- Farmer rejects the 'rocking horse' damped-cycle metaphor and favors a 'windy boat' view of the economy.
- Many macro variables, like unemployment, behave like persistent random walks rather than quick returns to a steady state.
