As Tyler Cowen of George Mason University puts it: “In the last 30 years the reliability of empirical work and estimations has risen dramatically. Which is good. But few new important ideas have really been generated.”
Big advances are easier to spot in hindsight. It may even turn out that there were some hidden among the presentations at the annual meeting of the American Economic Association in New Orleans.
The most compelling evidence on the impact of monetary policy on inflation came from Christina Romer of the University of California, Berkeley, who dusted off an old-fashioned method.
In her talk, she argued that monetary-policy changes have bigger effects on unemployment than inflation, and that it sometimes takes a few years for their main impact to be felt.
The method used by Ms Romer and her husband and co-author, David Romer, was not a new statistical technique or even timelier data, but a “narrative approach”.
The Romers combed through transcripts and minutes from meetings held by the Federal Open Market Committee—just as they had when they developed the method in a paper published in 1989.
The Economist 12 January 2023
Christina Duckworth Romer is former chair of the Council of Economic Advisers in the Obama administration.
She resigned from her role on the Council of Economic Advisers on September 3, 2010