Macroeconomics after the crisis: time to deal with the pretense-of-knowledge syndrome
"In this paper I argue that the current core of macroeconomics —by which I mainly mean the so-called dynamic stochastic general equilibrium approach— has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the prec...
| Main Authors: | , |
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| Institution: | ETUI-European Trade Union Institute |
| Format: | TEXT |
| Language: | English |
| Published: |
Cambridge, MA
2010
NBER |
| Subjects: | |
| Online Access: | https://www.labourline.org/KENTIKA-19183518124919017909-Macroeconomics-after-the-crisi.htm |
| _version_ | 1771659896092098562 |
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| author | National Bureau of Economic Research, Cambridge Caballero, Ricardo J. |
| author_facet | National Bureau of Economic Research, Cambridge Caballero, Ricardo J. |
| collection | Library items |
| description | "In this paper I argue that the current core of macroeconomics —by which I mainly mean the so-called dynamic stochastic general equilibrium approach— has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one. This is dangerous for both methodological and policy reasons. On the methodology front, macroeconomic research has been in “fine-tuning” mode within the local-maximum of the dynamic stochastic general equilibrium world, when we should be in “broad-exploration” mode. We are too far from absolute truth to be so specialized and to make the kind of confident quantitative claims that often emerge from the core. On the policy front, this confused precision creates the illusion that a minor adjustment in the standard policy framework will prevent future crises, and by doing so it leaves us overly exposed to the new and unexpected." |
| format | TEXT |
| id | 19183518124919017909_e5f72b84a87945ecb4cce27f11fee4cf |
| institution | ETUI-European Trade Union Institute |
| is_hierarchy_id | 19183518124919017909_e5f72b84a87945ecb4cce27f11fee4cf |
| is_hierarchy_title | Macroeconomics after the crisis: time to deal with the pretense-of-knowledge syndrome |
| language | English |
| physical | 23 p. Digital |
| publishDate | 2010 |
| publisher | Cambridge, MA NBER |
| spellingShingle | National Bureau of Economic Research, Cambridge Caballero, Ricardo J. economic recession economic research macroeconomics Macroeconomics after the crisis: time to deal with the pretense-of-knowledge syndrome |
| thumbnail | https://www.labourline.org/Image_prev.jpg?Archive=115300293358 |
| title | Macroeconomics after the crisis: time to deal with the pretense-of-knowledge syndrome |
| topic | economic recession economic research macroeconomics |
| url | https://www.labourline.org/KENTIKA-19183518124919017909-Macroeconomics-after-the-crisi.htm |