Robert J. Gordon: Expectation

Robert J. Gordon is American economist. Explore interesting quotes on expectation.
Robert J. Gordon: 22 quotes0 likes

“The century of revolution in the United States after the Civil War was economic, not political, freeing households from an unremitting daily grind of painful manual labor, household drudgery, darkness, isolation, and early death. Only one hundred years later, daily life had changed beyond recognition. Manual outdoor jobs were replaced by work in air-conditioned environments, housework was increasingly performed by electric appliances, darkness was replaced by light, and isolation was replaced not just by travel, but also by color television images bringing the world into the living room. Most important, a newborn infant could expect to live not to age forty-five, but to age seventy-two. The economic revolution of 1870 to 1970 was unique in human history, unrepeatable because so many of its achievements could happen only once.”

Robert J. Gordon

Source: The Rise and Fall of American Growth, 2016, p. 1 ; Lead paragraph

“New-classical economics has been undeniably influential, but not in the way that its three prominent creators originally imagined. Its most important contribution to macroeconomics, the assumption of rational expectations, was stolen almost immediately, and applied more fruitfully, by the new Keynesians.”

Robert J. Gordon

"Fresh Water, Salt Water, and other Macroeconomic Elixirs", 1989

“Much time was wasted and ink spilled in the late 1960s and early 1970s trying to interpret the lagged effect of prices on wages as reflecting adaptive lags in the formation of expectations. But if we have learned anything from the new Keynesian economics of Fischer, Taylor, Blanchard, and their younger followers, it is that price and wage inertia is compatible with rational expectations.”

Robert J. Gordon

Robert J. Gordon, The Phillips Curve Now and Then. (1990).

“This theme of mismeasurement interacts with the designation of the one hundred years between 1870 and 1970 as the “special century.” Measurement errors are greatest in the early years, both in the scope of the standard of living and in the extent of price index bias. Clearly the welfare benefits to consumers in the categories of life entirely omitted from GDP were greatest long ago: the transition from the scrub board to the automatic washing machine was a more important contributor to consumer welfare than the shift from manual to electronic washing machine controls or from a twelve-pound tub to an eighteen pound tub. The most important unmeasured benefit of all, the extension of life expectancy, occurred much more rapidly from 1890 to 1950 than afterward.”

Robert J. Gordon

Source: The Rise and Fall of American Growth, 2016, p. 13

“Part of the downfall came early and on theoretical grounds, with the realization that real-world information lags for aggregate variables like the price level and money supply were much too short to rationalize the persistent multiyear deviations from equilibrium that seemed to characterize business cycles in most industrialized countries. The second dubious assumption, continuous market clearing, was viewed more critically once it was recognized that it was not an inextricable concomitant of rational expectations, especially when Stanley Fischer (1977) and Edmund Phelps and John Taylor (1977) showed that rational expectations could be embedded in a model containing real-world institutional features like multiperiod wage and price contracts to generate nonmarket-clearing behavior. Once Fischer and Phelps-Taylor had shown that rational expectations by itself was a necessary but not a sufficient condition to validate new-classical policy conclusions, the race was on to develop the new-Keynesian theory based on rational expectations and one or another institutional impediment to continuous market clearing.”

Robert J. Gordon

"Fresh Water, Salt Water, and other Macroeconomic Elixirs", 1989

“The original Lucas version of the new-classical macroeconomics combined the undeniable appeal of rational expectations with two more dubious assumptions inherited from Friedman (1968), that is, continuous market clearing and imperfect information, to form the foundation of the famous “Lucas supply function” (more justly, the Friedman-Lucas supply function). Soon Sargent and Wallace (1975) extracted from Lucas’s model its implication for monetary policy, the famous “policy-ineffectiveness proposition.” The demonstration by Barro (1977) that one could interpret historical U. S. data to be consistent with the proposition and the theory brought new-classical economics to its shortlived period of peak influence.”

Robert J. Gordon

"Fresh Water, Salt Water, and other Macroeconomic Elixirs", 1989

“Since the late 1960s macroeconomic debates in the United States have centered on the competing interpretations of the new classical and new Keynesian macroeconomics. The initial new classical model developed in the early 1970s by Robert E. Lucas, Jr., combined market-clearing, imperfect information, and rational expectations. After much testing, it was eventually rejected in the late 1970s for failing to explain why business cycles lasted on average four years while information delays lasted only a few weeks. It was soon replaced by a second new classical approach, the Real Business Cycle (RBC) model, which was also based on continuous market clearing and competitive equilibrium, but now generated the business cycle through serially correlated procyclical technology shocks.”

Robert J. Gordon

Robert J. Gordon, Are Procyclical Productivity Fluctuations a Figment of Measurement Error? (1992).