By William K. Black
November 21, 2016 Bloomington, MN
Bloomberg has written an article about the origins of Paul Romer’s increasingly famous critique of modern macroeconomics.
His intention actually had been to write a paper that would celebrate advances in the understanding of what drives economic growth. But when he sat down to write it in the months before taking over as the World Bank’s chief economist, Romer quickly found his heart wasn’t in it. The world economy wasn’t growing much anyway; and the math that many colleagues were using to model it seemed unrealistic. He watched a documentary about the Church of Scientology, and was struck by how groupthink can operate.
So, Romer said in an interview at the Bank’s Washington headquarters, “I just thought, OK, I’m going to say what I think. I don’t know if I’m the right person, but no one else is going to say it. So I said it.”
The upshot was “The Trouble With Macroeconomics,” a scathing critique that landed among Romer’s peers like a grenade.
A bit of background makes the first paragraph more understandable. Romer’s specialty is developmental economics.