, > I've also heard that the New Keynesians accept a good deal of what the old > Keyneisans and neo-Keynesians rejected,
What's the difference between a new Keynesian and a neo-Keynesian? Is economics suffering from a modifier shortage? It seems fairly common in economics for anomalies to lead to paradigms being questioned, but the anomalies are usually not consistent enough to completely overturn the dominant paradigm, although they may lead to a modification. For example, the recent US "Goldilocks" economy led some to challenge the NAIRU concept; however, it was not abandoned, but rather it was acknowledged there were circumstances under which NAIRU might be considerably lower than previously thought. Also in the 1990's, the success some countries were having with "pegged" currencies led to some challenges as to whether floating currencies were necessarily superior to fixed exchange rates. But when some of the pegs either failed or had adverse consequences later in the decade, the pendulum seemed to swing back more to favoring floating currencies. Japanese and Korean mercantilism led to some challenges to the free trade paradigm, but when these economies fell on hard times in the '90's, doubts about free trade tended to recede. Maylasia recently showed that currency controls may do more good than harm in certain circumstances, but capital mobility is still viewed, no doubt correctly, as generally superior. Personally, I find economic anomalies particularly fascinating, but I suspect the basic workings of economies are well enough understood that full paradigm reversals must be rare. Here is something from the fields of biology and psychometric psychology that may (one day) lead to a reversal of the paradigm of development economics: it is generally assumed that human populations are so nearly equal on average that any country can develop a first-world industrial economy with the right policies. Yet a statistical analysis of the mean IQ of each non-communist country compared with its per capita GDP suggests that industrialized economies are either unable or extremely unlikely to develop in countries with mean IQ's below 90. But as national mean IQ's rise above 95, additional increases in mean IQ appear to be less valuable to economic development than macroeconomic policy. Perhaps this discovery receives little attention because it seems to be inherently discouraging. ~Alypius Skinner
