Noah Smith — The new heavyweight macro critics

Noah Smith weighs in on the side of Paul Romer.

So what seems to unite the new heavyweight macro critics, besides a lingering annoyance with Bob Lucas and his associates, is an emphasis on realism. Basically, these people are challenging the idea, very common in econ theory, that models shouldn't worry about being realistic. (Paul Pfleiderer is another economist who has recently made a similar complaint, though not in the context of macro.) They're not saying that economists need 100% perfect realism - that's the kind of thing you only get in physics, if anywhere. As Paul Krugman and Dani Rodrik have emphasized, even the people advocating for more realism acknowledge that there's some ideal middle ground. But if Romer, Kocherlakota, etc. are to be believed, macroeconomists aren't currently close to that optimal interior solution.

Maybe ontology is due to make a comeback.

Noahpinion
The new heavyweight macro critics

Noah Smith