Brad DeLong takes on John Cochrane again; I don’t have the heart or the time to do a full takedown myself. But I do want to make five points.

The first is the remarkable extent to which the anti-Keynesians remain addicted to arguments from authority, as opposed to arguments from evidence. We now have more than five years of experience with fiscal and monetary policy under zero-lower-bound conditions, and a large empirical literature studying that experience. Surely at this point you shouldn’t be responding to claims about policy by asserting “nobody has believed that since the 1970s” — what do smart people doing research on this massive natural experiment say now? (Hint: Keynes is looking pretty good.)

Second, it’s curious how the ground has shifted. Back in 2009 it was “nobody believes that fiscal policy can be expansionary”. Then people like Cochrane learned that there was a large New Keynesian literature, of which they had clearly been unaware; so it shifted to “nobody believes in the multiplier story in which spending raises incomes, which leads to further spending etc”. But even if it were true that nobody believed in that story, the New Keynesian model — in which government spending in a depressed economy puts idle resources to work — would still be enough to make the case for stimulus and against austerity.

Third, as Brad says, the reason the classic Keynesian multiplier isn’t in NK models is not because it has been disproved, but because such models deliberately give hostages — they show that Keynesian outcomes can emerge even if you assume rational expectations and intertemporal blah blah. Many people who do such models consider this a useful strategy, but remain open to the possibility that given real-world imperfections the classic story also has explanatory power — especially since empirical multipliers do seem to be more than 1.

In fact — well, let me quote from a paper that both offers an example of how this can work and refutes the claim that nothing like this is publishable in an economics journal:

Finally, we turn to the role of monetary and fiscal policy, where we find, as already indicated, that more debt can be the solution to a debt-induced slump. We also point out a possibly surprising implication of any story that attributes the slump to excess debt: precisely because some agents are debt-constrained, Ricardian equivalence breaks down, and old-fashioned Keynesian-type multipliers in which current consumption depends on current income reemerge.

Ahem.

Finally, it is true that there has been a divergence between what gets published in the journals and what people in policy-related positions believe. Keynesian models — even New Keynesian models — remain hard to get past referees. Meanwhile, places like the Federal Reserve and the International Monetary Fund continue to do economic analysis with a strong Keynesian flavor. (There was plenty of Keynesian storytelling at last week’s big IMF event, and I did not exactly get laughed out of the room …)

But look at who we’re talking about here. We’re not talking about dumb politicians who still do sort of Keynesian stuff. We’re talking about people like Olivier Blanchard and Janet Yellen — smart economists with plenty of technical knowledge and credentials, who continue to find Keynesian concepts useful even as such concepts are rarely published in academic journals. And it’s not just the people at the top: there’s a lot of Keynesian stuff going on in the research departments of these institutions.

So consider two hypotheses. One — which Cochrane appears to believe — is that being inside the Beltway has rotted Janet’s and Olivier’s brains, not to mention that of all their researchers, causing them to revert to primitive concepts that “everyone” knows are false. The other — which is what I hear from young economists — is that there is an equilibrium business cycle claque in academic macroeconomics that has in effect blockaded the journals to anyone trying to publish models and evidence that stress the demand side.

Obviously you know which story I believe. The main point, though, is that trying to argue from authority is even sillier here than in most situations. There’s a huge difference between “nobody believes that” and “none of my friends will let that get published in the journals they control”.