Blog Post of the Year

There won’t be a contest this year. This post wins.

There’s good macro criticism, cultural criticism (with swipes at intellectual elitism), stellar political analysis and fawning over Tyler Cowen.

4 thoughts on “Blog Post of the Year”

  1. Huh? — His only criticism of macro is based on EMH. But macro is about putting structure on the flow of (unexpected) innovations so where’s the issue?

    I stopped paying attention once he started mixing different stuff/people together and admitted unfamiliarity with current structural models. (I read this yesterday).

    True, macroheads should be upfront that you can forecast an event only to the extent that existing information helps forecast it. They should also pride themselves that their model usually do better than simple lag-lead correlations (or unrestricted VARs).

    People must have had very weak priors re: macro models since every recession, every “failure to forecast”, is taken as the refutation of all things modern macro (and ever worse, an excuse to bring back the zombie macro of decades ago).

    I think it’s time to stop dumping on macro and for macro people to stop self-immolating in a show of humility and regret.

    I would also suggest we stop teaching crap at the undergraduate level. And, finally, if you ask me (and I know you didn’t) we should stop judging models by their ability to replicate our prejudices, e.g. if money does little to nothing in the model and the data doesn’t contradict that, then let got of our worship of central banking omnipotence…

  2. “I think it’s time to stop dumping on macro and for macro people to stop self-immolating in a show of humility and regret.”

    I thought this was his point. Especially when he was talking about Lucas’ reaction.

  3. “People must have had very weak priors re: macro models since every recession, every ‘failure to forecast’, is taken as the refutation of all things modern macro…”

    I think that this is really the most disturbing aspect of the recent debate regarding the validity of macro. We are macroeconomists, not fortune-tellers.

  4. I can’t recall who said it, but the point of modeling (especially in macro, where we know the world is more complex than the model) is to explain, not just to predict – and that is why modern macro is being dumped on.

    As for the EMH, there can be rationalbubbles where the smart money rides the bubble, instead of trying to pop it.

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