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When it comes to macro, it is pretty useless. See for example the polemic caused by this paper by Paul Romer, chief economist of the World Bank: https://paulrom
by szeptik 9y ago
When it comes to macro, it is pretty useless. See for example the polemic caused by this paper by Paul Romer, chief economist of the World Bank: https://paulromer.net/trouble-with-macroeconomics-update/ https://paulromer.net/trouble-with-macroeconomics-update/
- bachmeier 9y agoIf that's what you took from his paper, you didn't understand it. He is specifically arguing against DSGE models, a popular methodology for studying business cycles, but one that has been unsuccessful. That is not the same as arguing that all of macro is useless. It's not different from saying that criticism of imperative programming means all of computer programming is useless.
- marcosdumay 9y agoIf the community does not take status and funding away from failed models, it ceases doing science. As a group, economists aren't letting DSGE go. There are many economists trying to do the right thing, but overall the area has a deep problem.
- nostrebored 9y agoDo you feel the same way about climate research?
- marcosdumay 9y agoClimate researchers abandon models all the time.
- nostrebored 9y agoNecessarily, as none of their models work, which is a natural consequence of how complicated the system is, just like macroecon.
- bachmeier 9y agoYou're not going to take funding away from DSGE models because it's mostly individual researchers writing programs for themselves. Ricardo Reis argues that macro has largely moved beyond real business cycles with frictions[1]. I'm not as optimistic as him, but DSGE is no longer as prestigious as it once was. [1] http://personal.lse.ac.uk/reisr/papers/17-wrong.pdf http://personal.lse.ac.uk/reisr/papers/17-wrong.pdf