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The Trouble With Macroeconomics
Article

The Trouble With Macroeconomics

Paul Romer, 2016

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Editorial Rating

9

Qualities

  • Controversial
  • Analytical
  • Innovative

Recommendation

President Harry S. Truman once famously quipped, “Give me a one-handed economist. All my economists say ‘on the one hand…on the other’.” His pithy statement remains true today. Professor Paul Romer adds to the criticism heaped onto the discipline of macroeconomics in this illuminating paper, in which he contends that the field has become a regressive branch of knowledge – more punditry than science. getAbstract recommends this provocative, name-naming, esoteric report to policy officials and experts interested in an insider’s critique of his fellow economists.

Take-Aways

  • Modern economics is overreliant on models that “now use incredible identifying assumptions to reach bewildering conclusions.”
  • Models incorporate “imaginary shocks, instead of actions that people take” into equations as determinants of economic conditions.
  • The lack of specific numbers in favor of guesses, projections and biases – “facts with unknown truth value” – skews the presentation of predicted economic outcomes.

About the Author

Paul Romer is a professor at New York University’s Stern School of Business and director of the Marron Institute of Urban Management.


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