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I'm a skeptic, this could end up as a tyranny of metrics. Even the smartest people are often wrong about what is best for everyone. There's an information probl

I'm a skeptic, this could end up as a tyranny of metrics. Even the smartest people are often wrong about what is best for everyone. There's an information problem in that though there are/will be plenty of metrics, not all of the necessary information can always be known. That's ok for a company, but not an economy. Just make the data "open" to everyone, "the model" itself is a misnomer. Denmark already has one of the most free and open economies in the entire world...hopefully this idea doesn't help to kill the golden goose. I frankly think it will have no virtually no influence or impact.

pdabbadabba 5y ago
What are you a skeptic of, exactly? This is the model actually used by the Danish Ministry of Finance to study the effects of various policy changes. I don't think there's any need to speculate about how much influence it will have: it apparently is already in use and guides policymaking. Other advanced economies have their own similar models used for studying and making various aspects of economic policy. I think another poster has provided a link to the model used by the NY Fed. At a high level, I, like you, am fairly persuaded by the Hayekian point that its impossible to collect enough information or otherwise capture the necessary complexity to reliably model even a moderately complex economy with enough fidelity to allow central planning. But this is far short of that. And there does seem to be a need for general models to allow policymakers to make informed decisions. The only alternative would seem to be to make no decisions at all which a) is itself a decision and 2) does not seem to be an option that many people seriously advance. I guess your position could be that these efforts are doomed to failure--i.e., no model will provide useful results. But that position--that no model will provide any amount of useful information, even at very low levels of granularity, is a very strong position--much stronger than Hayek's argument against planned economies--that I'd have to see some serious support for. And it certainly doesn't seem like a position that people should accept without a very convincing showing of its futility, given the significant costs of making policy decisions without even attempting to model them, or of making no policy interventions at all.

pdabbadabba 5y ago

What are you a skeptic of, exactly? This is the model actually used by the Danish Ministry of Finance to study the effects of various policy changes. I don't think there's any need to speculate about how much influence it will have: it apparently is already in use and guides policymaking. Other advanced economies have their own similar models used for studying and making various aspects of economic policy. I think another poster has provided a link to the model used by the NY Fed. At a high level, I, like you, am fairly persuaded by the Hayekian point that its impossible to collect enough information or otherwise capture the necessary complexity to reliably model even a moderately complex economy with enough fidelity to allow central planning. But this is far short of that. And there does seem to be a need for general models to allow policymakers to make informed decisions. The only alternative would seem to be to make no decisions at all which a) is itself a decision and 2) does not seem to be an option that many people seriously advance. I guess your position could be that these efforts are doomed to failure--i.e., no model will provide useful results. But that position--that no model will provide any amount of useful information, even at very low levels of granularity, is a very strong position--much stronger than Hayek's argument against planned economies--that I'd have to see some serious support for. And it certainly doesn't seem like a position that people should accept without a very convincing showing of its futility, given the significant costs of making policy decisions without even attempting to model them, or of making no policy interventions at all.