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January 25, 2014

'Is Macro Giving Economics a Bad Rap?'

Chris House defends macro:
Is Macro Giving Economics a Bad Rap?: Noah Smith really has it in for macroeconomists. He has recently written an article in The Week in which he claims that macro is one of the weaker fields in economics...
I think the opposite is true. Macro is one of the stronger fields, if not the strongest ... Macro is quite productive and overall quite healthy. There are several distinguishing features of macroeconomics which set it apart from many other areas in economics. In my assessment, along most of these dimensions, macro comes out looking quite good.
First, macroeconomists are constantly comparing models to data. ... Holding theories up to the data is a scary and humiliating step but it is a necessary step if economic science is to make progress. Judged on this basis, macro is to be commended...
Second, in macroeconomics, there is a constant push to quantify theories. That is, there is always an effort to attach meaningful parameter values to the models. You can have any theory you want but at the end of the day, you are interested not only in idea itself, but also in the magnitude of the effects. This is again one of the ways in which macro is quite unlike other fields.
Third, when the models fail (and they always fail eventually), the response of macroeconomists isn’t to simply abandon the model, but rather they highlight the nature of the failure.  ...
Lastly, unlike many other fields, macroeconomists need to have a wide array of skills and familiarity with many sub-fields of economics. As a group, macroeconomists have knowledge of a wide range of analytical techniques, probably better knowledge of history, and greater familiarity and appreciation of economic institutions than the average economist.
In his opening remarks, Noah concedes that macro is “the glamor division of econ”. He’s right. What he doesn’t tell you is that the glamour division is actually doing pretty well. ...

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