The Economists' New Clothes
With economists struggling to derive credible explanations of macroeconomic conditions from the prevailing models, those who have long criticized the discipline for its scientific pretensions are feeling vindicated.
The widespread belief that economic activity will follow a regular cycle around a stable growth trend is not very helpful beyond the very short term.
Rather, the economic disruptions we are experiencing highlight an obvious fact, but one that prevailing models assume away: the future is fundamentally uncertain, and not all risks are quantifiable.
Project Syndicate September 2019
Economic theory discredited
The widespread belief that economic activity will follow a regular cycle around a stable growth trend is not very helpful beyond the very short term.
Rather, the economic disruptions we are experiencing highlight an obvious fact, but one that prevailing models assume away: the future is fundamentally uncertain, and not all risks are quantifiable.
Project Syndicate September 2019
Economic theory discredited
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