I've been following your blog for a while, and to be honest it has given me a somewhat negative view of macro-economics. It seems like you suggest any macro-economic beliefs are valid as long as they are consistent with themselves with the data. I don't have any objections to that, that's fairly standard scientific practice. However, the data seems to be of very poor quality. In some cases, it seems that there is enough data that you can draw some conclusions as to what causes a localized phenomenon, but this seems to rarely lead to well-founded policy suggestions as there isn't data available for any proposed policies. These studies also doesn't seem to generalize well as there such a huge set of variables that your localized phenomenon doesn't occur exactly anywhere else. So it seems that "consistent with existing data" doesn't play as big a role in defining beliefs as in other fields.
It also seems that given a set of beliefs, its not always clear what predictions can be made with them, since economists with similar beliefs seem to apply them differently. Even if predictions can be made, it seems nearly impossible to test them. In short, overall, the field seems to be extremely unempirical.
This leads me to the following questions:
Have I got it wrong, and is macroeconomics more empirical than I'm giving it credit for?
In general, given the difficulty in testing predictions, how can you tell good macroeconomics from bad?
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Dear Dr. Cohen,
I've been following your blog for a while, and to be honest it has given me a somewhat negative view of macro-economics. It seems like you suggest any macro-economic beliefs are valid as long as they are consistent with themselves with the data. I don't have any objections to that, that's fairly standard scientific practice. However, the data seems to be of very poor quality. In some cases, it seems that there is enough data that you can draw some conclusions as to what causes a localized phenomenon, but this seems to rarely lead to well-founded policy suggestions as there isn't data available for any proposed policies. These studies also doesn't seem to generalize well as there such a huge set of variables that your localized phenomenon doesn't occur exactly anywhere else. So it seems that "consistent with existing data" doesn't play as big a role in defining beliefs as in other fields.
It also seems that given a set of beliefs, its not always clear what predictions can be made with them, since economists with similar beliefs seem to apply them differently. Even if predictions can be made, it seems nearly impossible to test them. In short, overall, the field seems to be extremely unempirical.
This leads me to the following questions:
Have I got it wrong, and is macroeconomics more empirical than I'm giving it credit for?
In general, given the difficulty in testing predictions, how can you tell good macroeconomics from bad?
Thank you in advance.
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