In essence the standards are now so high in terms of skills and data sets and thoroughness that it is mainly the young and ambitious who publish in tier one journals. Those people are found around the world. The 44-year-old tenured Princeton economist isn't so much in the AER as in times past.
[note: I'm not the 'Eric' he is referring to earlier in his post]
Economics is not like physics in the 1920's where foundational results are being generated by prodigies, so having the top forums dominated by kids who really like extending formal models is not a great signal. For fundamental constants, physicists argue about the 7-th digit, while economists argue about the sign. Indeed, for all the emphasis in top journals on mathematics, formal proofs, econometrics with the newest standard errors, most of the debate about the 2008 crisis was historical, using a little statistics, but mostly arguments that did not hinge on the existence of an equilibrium.
Top tier publications are now solely for those climbing the tenure ladder, a way to establish bona fides among their peers who are involved with the very important business of determining who belongs in their elite group. That's really a sad, because it means that those in the peak of their careers have moved on to something with greater significance, and the biggest signal a field isn't fruitful is people stop doing it when presented with other opportunities.
Back in 1947s, Paul A. Samuelson laid down his Foundations of Economics, and his model was to formalize a hypothesis based on mathematical assumptions and utility maximization, generate some empirical implications, and test using econometrics. As much as it would be nice if we could steamroll through interesting and important questions this way, it violates Niels Bohr's important rule: never express yourself more clearly than you are able to think.
One big problem with economists is they get into parochial technical issues that are not falsifiable, because its very easy for insiders to become obsessed with process and technique as opposed to some tangible result. Tools are important, so there's no intrinsic flaw there, but a tool's importance is reflected by its productivity, and Bellman's equations, 3-stage least squares, and Banach spaces, simply have not generated any new, true, and important findings in economics.
Most economic papers proving that if you assume X, you get Y, to which someone can say you need to assume X', which implies something quite different. Or that for a particular dataset, applying some technique generates p-values of 0.01 on some coefficient of interest, but then this totally ignores other data that imply contrary conclusions . Remember that Arrow and Debreu 'proved' a free market competitive equilibrium is in some sense societally optimal. Yet this didn't alter the debate about Free Markets vs. Government because those who like government just said the assumptions were unrealistic. And of course they were right, all assumptions are unrealistic. Theory really is just a heuristic in economics, such as when Arrow and Debreu's work gives us a deeper understanding of the basic argument made by Adam Smith centuries ago. Mathematical proofs are never definitive in their application, but they can be very useful in isolating the essence of an argument, especially among readers who understand math (eg, the Townsend Model and the usefulness of debt vs. equity, the Arbitrage Pricing Theory and the linearity of returns to 'risk factors, are best understood via math). These formalizations, however, have not settled any practical debates (after all, socialist economics in the US only became marginalized when the Soviet Union collapsed in 1989).
All this emphasis on pure logic in the most prestigious journals means economists will become less focused on useful research. If the main criteria for advancement is publishing work that is dominated by young researchers who admittedly know 10 times more math than history, self-referential threads grow unimpeded. Criticizing those also actively publishing is not a good idea because recently published work tends to be liked by editors and referees (after all, they published it!), who are evaluating your paper. Further, a great way to get invited to conferences, get grants from the NBER or the NSF allocated by those same referees and editors, is to extend 'popular' research, where popular means 'research done by those same referees and editors'. It's a path to irrelevance, because actually explaining reality uses softer techniques like analogies, history, surveys of very different data, institutional knowledge--all of which are anathema to the 'rigor' that defines a prestigious journal.
An expert is a person who has made all the mistakes that can be made in a very narrow field.
~Niels Bohr
Alas, I don't think top economists make mistakes any more, and that is not a good thing. Like mathematicians, everything they do is right as far as it goes, but it's usually irrelevant.
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