“My decision to leave applied mathematics for economics was in part tied to the widely-held popular belief in the 1960s that macroeconomics had made fundamental inroads into controlling business cycles and stopping dysfunctional unemployment and inflation.”

— Robert C. Merton

Robert C. Merton, " Robert C. Merton - Biographical http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1997/merton-bio.html," at Nobelprize.org, 1997

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Robert C. Merton1

American economist 1944

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“During the relatively brief period in the late 1960s when economists were pondering the possible obsolescence of business cycles, the scholarly discipline of macroeconomics showed signs of becoming fragmented into speciality areas devoted to components of the then popular large-scale econometric models-for example, consumption, investment, money demand, and the Phillips curve. But more recently the revival of severe real world business cycles, together with the revolutions associated with Milton Friedman's monetarism and Lucas's classical equilibrium models, has brought about a revival of interest in economic analysis that focuses on a few broad aggregates summarizing activity in the economy as a whole-nominal and real income, the inflation rate, and the unemployment rate.”

Robert J. Gordon (1940) American economist

Source: The American Business Cycle, 1986, p. 2

“One thing we’ve learned from the economic events of the past two years is that macroeconomics, or at least the part of macroeconomics that studies the business cycle, is a weak field. With only a few exceptions, macroeconomists, including the most illustrious, did not anticipate the current depression.”

Richard A. Posner (1939) United States federal judge

The Crisis of Capitalist Democracy (2010) Ch. 10 The Crisis of Macroeconomics.

“One interesting footnote: although Friedman made great strides in macroeconomics by applying the concept of individual rationality, he also knew where to stop. In the 1970s, some economists pushed Friedman’s analysis of inflation even further, arguing that there is no usable trade-off between inflation and unemployment even in the short run, because people will anticipate government actions and build that anticipation, as well as past experience, into their price-setting and wage-bargaining. This doctrine, known as “rational expectations,” swept through much of academic economics. But Friedman never went there.”

Paul Krugman (1953) American economist

"Who Was Milton Friedman?", The New York Review of Books (February 15, 2007)
The New York Review of Books articles

“But business cycles as a subject for study have enjoyed a revival for at least a decade now, stimulated in part by the severity of the 1974-75 and 1981-82 recessions and in part by the intellectual ferment surrounding the development of the "equilibrium business cycle model" and the attention paid to the seminal work of Robert E. Lucas, Jr., contained in his book Studies in Business Cycle Theory (1981). Indeed, there is no longer any need to lament the passing of economics courses explicitly carrying the title "Business Cycles," since the topic of business cycle behavior and analysis has so infiltrated courses carrying the title "Macroeconomics" that the two subjects have become almost interchangeable. 2 In this light it is fitting that the major research program of the NBER in this area is called "Economic Fluctuations" rather than "Macroeconomics."”

Robert J. Gordon (1940) American economist

Source: The American Business Cycle, 1986, p. 2

“I learned later that economic reasoning was not just mathematics and could be applied to a wide variety of social problems. Now, I think that no forms of social interaction—including religion, love, crime, and fertility choice—are immune from the power of economic reasoning. Hence, even widely held beliefs—for example, that beauty is an illegitimate credential of a worker or that democracy is important for economic growth—are not sacred truths and are subject to analysis.”

Robert Barro (1944) American classical macroeconomist

Source: Nothing Is Sacred (2002), p. xiii

“Software Engineering Economics is an invaluable guide to determining software costs, applying the fundamental concepts of microeconomics to software engineering, and utilizing economic analysis in software engineering decision making.”

Barry Boehm (1935) American software engineer

Barry W. Boehm (1981) Software engineering economics. Abstract.

“The problem for China is political. China is held together by money, not ideology. When there is an economic downturn and the money stops rolling in, not only will the banking system spasm, but the entire fabric of Chinese society will shudder. Loyalty in China is either bought or coerced. Without available money, only coercion remains. Business slowdowns can generally lead to instability because they lead to business failure and unemployment. In a country where poverty is endemic and unemployment widespread, the added pressure of an economic downturn will result in political instability.”

George Friedman (1949) American businessman and political scientist

Source: The Next 100 Years: A Forecast for the 21st Century (2009), p. 96

“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 (1940) American economist

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

“The postwar era has not surprised Arthur Burns, for business cycles have continued their "unceasing round." although the United States recession of 1981-82 was the eighth since World War II and the deepest postwar slump by almost any measure, the 1983-84 recovery displayed an upward momentum sufficient to befuddle forecasters and delight incumbent politicians. Nor would a reincarnated Joseph Schumpeter be disappointed in the current status of business cycle research in the economics profession. To be sure, interest in business cycles decayed during the prosperity of the 1960s, as symbolized in the 1969 conference volume, Is the Business Cycle Obsolete? and in Paul Samuelson's remark the same year that the National Bureau of Economic Research "has worked itself out of one of its first jobs, namely, the business cycle."”

Robert J. Gordon (1940) American economist

Source: The American Business Cycle, 1986, p. 1-2

“Keynes's economic philosophy is thus made up of three interdependent parts: his technical macroeconomics, his embattled political philosophy and his ultimate ethical purpose.”

Robert Skidelsky (1939) Economist and author

John Maynard Keynes: 1883-1946: Economist, Philosopher, Statesman (2003), Introduction

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