We know economists sometimes like to use past economists to construct a lineage to the current practice. They like the idea of progress and appreciate triumphal histories. In reading Schmitt-Grohé and Uribe’s paper, “What’s News In Business Cycles,” I came across the following sentence (p.1, but the paper does have a page 0):
The idea that changes in expectations about the future path of exogenous economic fundamentals may represent an important source of aggregate fluctuations has a long history in economics, going back at least to Pigou (1927). Recently, these ideas have been revived in an important paper by Beaudry and Portier (2006).
The book by Pigou referred here is his “Industrial Fluctuations”.
Depite any rethorical device the authors may have employed, I keep wondering about the usefulness (for their audience of economists—sorry fellows, no way to avoid coming back to audience…) of such superficial “historical” claims. Why is it useful to have Pigou as one entry in a reference list of 14 items, most of them dated from the mid 1990s onward? Is it a way of showing one is “well educated”? Is Pigou a “giant” on whose shoulder one can stand? It will be interesting to see whether or not this sentence will be kept in the published version of the paper.