9 things only neoclassical economists will understand

1) The Cobb-Douglas Production Function

(Giuseppe Vitucci)

Not even micro-founded in its traditional presentation, but useful nonetheless.

2) Liquidity constraints

(José Manuel Suárez)

This is like being broke, but more complicated.

3) The Hodrick-Prescott Filter

Useful when you need to make messy real-world data confirm to a nice theory.

4) Dynamic Stochastic General Equilibrium

OMG! Euler Equation

Eggerston (2008) proves that with sufficient application of ingenuity, you can make a DSGE model to prove anything.

5) Ricardo-De Viti-Barro equivalence theorem

Sure doesn't seem true, but a cool result for explaining to politicians why they're wrong about stuff.

6) The IS-LM Model

Thomas Steiner

A macroeconomic model so simple even an undergraduate can understand it.

7) Michael Woodford's textbook

Next time some BA-wielding journalist wants to opine about monetary policy, ask them if they've even read Interest and Prices.

8) Modigliani-Miller

Caryatid (Amadeo Modigliani)

This has nothing to do with the painter.

9) The Hecksher-Ohlin theorem

Hecksher and Ohlin (public domain photos, author unknown)

Resource endowments matter, duh.

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