From the delong Twitterstream: October 5, 2011
Income and Wealth Inequality: We Answer Your Questions

Yet More Rites of Tribal Solidarirty Among the Right-Wing Econ…

If you start from the quantity theory of money, and if your model of the determination of the current flow of economy-wide spending has an interest-sensitive money-demand function in it--then your model has an IS-LM representation. Any claim that you don't use or don't teach IS-LM or that IS-LM is "wrong" is either confusion or a tribal declaration of allegiance and solidarity.

Yet for some very strange reason, Tyler Cowen continues to approvingly cite the very strange Stephen Williamson:

Putting the IS-LM debate in context: Stephen Williamson’s post is too polemic for my tastes, but I find he nonetheless places this debate in useful perspective:

Generations of textbook writers found IS-LM a very convenient model to use in getting basic Keynesian ideas across to undergraduate students. However, frontier macroeconomic researchers did not take IS-LM seriously after the early 1970s. By about 1980, IS-LM had essentially disappeared from the top economics journals and from the top PhD programs in economics. But one could still find some version of IS-LM in undergraduate textbooks. How is IS-LM used today? You do not see it in published macroeconomic research, as a framework for discussion among policymakers, or in PhD programs in economics. It is certainly not necessary to use it in teaching Keynesian economics to undergraduates. In the third edition of my intermediate macro textbook, you will not find an IS-LM model. I have found what I think are more straightforward and instructive ways to get Keynesian economics across, and to get it across in line with what modern Keynesian researchers actually do. For example, I do a version of a Keynesian coordination failure model that looks like what Roger Farmer did in the early 1990s, and an undergraduate version of a Woodford sticky-price model…

From this I learn that Stephen Williamson does not talk to very many policymakers these days.

And I learn that he, too, is into making tribal declarations of allegiance.

Now you can always push the IS-LM representation of your model into the background, and put it behind the curtain (which is what coordination failure and sticy-price models do). And there are certainly times when you would want to do so--when other aspects of the macroeconomy are of more interest than analyzing the consequences of government policies that swap money for other financial assets, that drop money from helicopters, or that borrow-and-spend.

But is now one of those times? Certainly not!