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Is something really wrong with macroeconomics?

Reis, Ricardo (2018) Is something really wrong with macroeconomics? Oxford Review of Economic Policy, 34 (1-2). pp. 132-155. ISSN 0266-903X

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Identification Number: 10.1093/oxrep/grx053

Abstract

Many critiques of the state of macroeconomics are off target. Current macroeconomic research is not mindless DSGE modelling filled with ridiculous assumptions and oblivious of data. Rather, young macroeconomists are doing vibrant, varied, and exciting work, getting jobs, and being published. Macroeconomics informs economic policy only moderately, and not more than nor differently from other fields in economics. Monetary policy has benefitted significantly from this advice in keeping inflation under control and preventing a new Great Depression. Macroeconomic forecasts perform poorly in absolute terms and, given the size of the challenge, probably always will. But relative to the level of aggregation, the time horizon, and the amount of funding, macroeconomic forecasts are not so obviously worse than those in other fields. What is most wrong with macroeconomics today is perhaps that there is too little discussion of which models to teach and too little investment in graduate-level textbooks.

Item Type: Article
Official URL: https://academic.oup.com/oxrep
Additional Information: © 2017 Oxford University Press and Oxford Review of Economic Policy Limited
Divisions: Economics
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
JEL classification: A - General Economics and Teaching > A1 - General Economics > A11 - Role of Economics; Role of Economists; Market for Economists
B - Schools of Economic Thought and Methodology > B2 - History of Economic Thought since 1925 > B22 - Macroeconomics
Sets: Departments > Economics
Collections > Economists Online
Date Deposited: 22 Nov 2017 11:48
Last Modified: 20 Aug 2019 00:05
URI: http://eprints.lse.ac.uk/id/eprint/85671

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