Saturday Haiku: Crossing the waters in Spring
still waters
in the cool valley
spring crossing
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Image: Benkei Bridge
Artist: Tsuchiya Kôitsu (Japanese, 1870–1949)
Medium: Woodblock print
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Econ theory as signaling?
I don't expend much effort dissing macroeconomics these days, but every once in a while it's good to give people a reminder. I wrote a Bloomberg post about how academic macro (or more accurately, mainstream macro theory) has not really helped out the finance industry, the Fed, or coffee house discussions. The reason, as Justin Wolfers recently pointed out , is basically that DSGE models don't work. Brad DeLong then wrote a post riffing on mine , which is excellent and which you should read. A super-fun Twitter discussion then followed, part of which Brad storified for posterity . But that leaves the question: Assuming Wolfers and DeLong and I aren't just blowing smoke out of our rear ends, and DSGE models really don't work, why do so many macroeconomists spend so much time on them? One obvious hypothesis is that a huge percent of their human capital is already invested in knowing how to do this technique, so they just keep doing what they know how to do, and teachi...
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