OK, several correspondents have weighed in on the story I’d heard about the economics department that abandoned econometrics because it was rejecting its models. It wasn’t quite as alleged, but close enough.

The department in question was the University of Minnesota. For those readers new to this discussion, “freshwater-saltwater” was a distinction originally due to Bob Hall, who noted that the economics departments that had rejected Keynes and anything reminiscent of Keynes were inland schools like Minnesota, Chicago, and Rochester, whereas the places that retained a belief in the usefulness of monetary and fiscal policy were places like MIT, Princeton, and Berkeley.

So the story as I now have it was that there was harsh conflict between the macroeconomic theorists at UMinn, especially Prescott, and the econometricians who had the nasty habit of showing that those models didn’t work. And for at least some period econometrics was dropped as a required course for the Ph.D. — I don’t know whether it has been restored.

I think it’s worth putting two quotes up, one after the other:

Robert Lucas in 1980 (pdf):

At research seminars, people don’t take Keynesian theorizing seriously anymore; the audience starts to whisper and giggle to one another

Chris Sims, 2011:

Professor Sims doesn’t want to be pigeonholed. “I’m not ‘non-Keynesian,’ ” he said, adding that he has been an active “promoter of new Keynesian macroeconomic models,” because they “are the place in our profession where theory and data and policy decision-making are coming together.”

I’d just add that correspondents tell me that the anti-Keynesians pretty much blockade any hiring of new Keynesians in their departments.