Monday, July 5, 2010

Economics Is Hard

A link to the soon-to-be classic essay (free registration required). this sentence is a manifesto for working macroeconomists:

I have contributed no earth-shaking ideas to Economics and work fundamentally as a worker bee chipping away with known tools at portions of larger problems.  It is precisely from this low-level vantage point that I am totally puzzled by the willingness of many who fearlessly and breathlessly opine about economics, especially macro-economic policy.

The Lucas’ Critique makes everything hard:

What makes macroeconomics very complicated is that economic actors...  act.

And … what can you get from, say, Glenn Beck or Keith Olbermann?

Can they [non-economist pundits] provide you, the reader, with an internally consistent analysis of a dynamic system subject to random shocks populated by thoughtful actors whose collective actions must be rendered feasible? For many questions, I and my colleagues can, and for those that the profession cannot, the blogging crowd probably can’t either.

Perhaps Obama could learn a thing or two from economists:

I live in a world where people are not falling over themselves to believe my assertions …

Of course, vX readers have seen my related “Why Macro Is So Hard”.

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