14 September 2016

Quote of the Day

For more than three decades, macroeconomics has gone backwards. The treatment of identification now is no more credible than in the early 1970s but escapes challenge because it is so much more opaque. Macroeconomic theorists dismiss mere facts by feigning an obtuse ignorance about such simple assertions as "tight monetary policy can cause a recession." Their models attribute fluctuations in aggregate variables to imaginary causal forces that are not influenced by the action that any person takes. A parallel with string theory from physics hints at a general failure mode of science that is triggered when respect for highly regarded leaders evolves into a deference to authority that displaces objective fact from its position as the ultimate determinant of scientific truth.
Paul Romer, Chief Economist at the World Bank
I think that this is a good description of both the current state of economics and the string theory sect faction in physics.

They both favor mathematical elegance over a coherent model which would provide some of predictive value.

H/t naked capitalism


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