Thursday, March 31, 2011
The Showdown- Chapter 19 Pages 256-259
Before his 1986 paper was even published, Romer changed his mind regarding methods and switched from a model of perfect competition to one of monopolistic competition. With this model of monopolistic competition, Romer explained that through gaining knowledge one seeks to "differentiate his product," to gain the special something that will set him apart. Lucas lectured that most of what we know is learned from others free of cost, while Romer argued that we only think we get it for free. Good will and the expectation of future gains (contribution to accounts in the favor bank) were the currency used in the exchange of knowledge.
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A for Jim.
ReplyDeleteWhy does (or will) a professor write a recommendation for you?
Is it because you hang around them, or is it because you exchange ideas with them. The former is Lucas, the latter is Romer.
For my part, there's nothing worse than trying to write a recommendation about someone you can't say anything about (not just good things, I have students I know nothing about).
Romer's point is that you and I are a type of good that we build by differentiating ourselves from each other: the paying it forward of making deposits in the favor bank is how we sell ourselves to each other.
What a society is then, is a connection of people doing this for and to each other.