Jonathon Portes (micro) at Not the Treasury View asks:
Which (macro)-economists are worth listening to?
This post relates to the ongoing blog debate on “the state of macroeconomics”, which I contributed to here, and which has drawn in a whole host of economics bloggers who know far more about modern macroeconomic theory than I do. However, here I want to address a related, more mundane question, but one which is perhaps more relevant to most non-economists’ concerns. That is, when economists argue about the correct stance of policy, who should we (policymakers, commentators, and the general public) listen to?
This question was prompted by a recent exchange I had with Ed Vaizey and Simon Hughes on the BBC’s Daily Politics: I pointed out that not only was the government’s decision in 2010 to cut the deficit too quickly doing considerable economic damage, but that this was both predictable and predicted by economists such as Paul Krugman and Martin Wolf. Their response was essentially “how were we to know which economists to listen to? Others were saying the opposite”.
This is a fair question. My answer to it is that policymakers and the public should listen to economists who fulfill two critera: first, they have made empirically testable predictions (conditional or unconditional – see Krugman here) that have proved, by and large, to be broadly consistent with the data; and second, they base those predictions on an analytic framework (not necessarily a formal model) that is persuasive. In other words, getting it right alone is not enough; it should be possible to show your workings – to explain why you got it right. Otherwise, your predictions may be interesting, but they tell you little about how to formulate policy. (bolding mine…Rdan)
My shortlist (apologies in advance to those I’ve omitted) of economists commenting on macroeconomic policy who I think qualify is something like the following:
- Adam Posen on monetary policy when interest rates are at the zero lower bound;
- Paul de Grauwe on sovereign and eurozone debt;
- Martin Wolf on private sector savings and public sector deficits (the financial balance approach);
- Richard Koo on the implications of a “balance sheet recession”