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Is something really wrong with macroeconomics?

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  • Reis, Ricardo

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.

Suggested Citation

  • Reis, Ricardo, 2018. "Is something really wrong with macroeconomics?," LSE Research Online Documents on Economics 85671, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:85671
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    methodology; graduate teaching; forecasting; public debate;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics

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