Why is it always assumed that “philosophy” or “pictures and talk” are substitutes for mathematical analysis? I mean, they’re compliments right?

A neat application of Robustness

Robustness is a fledgling literature in Macro. The primary concern of robust analysis is that we don’t know the exact model of the economy and this model uncertainty has policy implications. Also, the math is neat. Uncertainty about what the correct model is causes optimal policy to give heavy weight to worse-case scenarios. Ellison and […]

It is profound and earth shaking…

… every time I run into a statement like this: “But all interesting models involve unrealistic simplifications, which is why they must be tested against data.” We can know things a priori, but we can’t know how important those things are a priori. A model can tell us how a particular mechanism operates, but it […]

Mike in The Nation

“Let’s look at several of the problems that happened over the past few years in the financial sector, and see how legislative efforts have attempted to address them. (Spoiler alert: not very well.)” Mike tells this story: Our regulator’s goal isn’t to make a system in which there are never failures but a system in […]

Experimental science isn’t “hard”

Angus Deaton on the “project evaluation” craze: Randomized controlled trials cannot automatically trump other evidence, they do not occupy any special place in some hierarchy of evidence, nor does it make sense to refer to them as “hard” while other methods are “soft”. These rhetorical devices are just that; a metaphor is not an argument… […]

Thar be no data here!

I confess. I don’t get Gordon’s critique of modern macro. Questions for Prof. Gordon: If you think other things should be modeled, like volatile investment, why don’t you add them to the model? Why should we scrap a modelling technique because you don’t think the right things were modeled? We don’t throw out hammers because […]

The bathwater

Because I stopped reading it at about the third paragraph where he starts listing all the things that macroeconomists do but claims they don’t do (e.g. financial channels, model robustness, unemployment), can someone explain to me the argument Krugman makes? From Sumner’s critique it sounds like Krugman wants to go back to old school Keynesian […]

Macroeconomic forecasting

You have four options: Simple statistics (i.e. use lagged values to predict future values) Complex statistics (e.g. VARs) Model the economy and get forecasts from the model Use the average from lots of models (e.g. ask the experts and take an average) Surprisingly, (1) almost always beats (2). If you wanna do (1), it is […]

The Making of an Economist

So if you like catching people in gotcha moments… here’s a post of mine where I urge macroeconomists to discover non-rationalizing models. Ahh, so young and new to the world! The difference between the 2007 version of Will Ambrosini and the new and improved version is the experience of attending dozens of macro seminars. Its […]


There’s been a couple criticism floating about regarding how macroeconomics do their thing. Here’s Matt Yglesias wondering about Levitt wondering about microfoundations. And here’s Ezra Klein turning , unwittingly I think, Cowen’s newest paper into an ideological flamewar about… rational expectations… of all things. These criticisms are kinda funny. They’re a bit like going after […]