Black Box Macro
My EconTalk conversation with Guillermo Calvo has me thinking the tendency of macroeconomists to see the economy as a black box. In black box macro, we don’t have to worry about the complexity of what’s going on inside, not because it’s too complicated but because it’s unnecessary.
In this mainstream view, the opacity of the box is a feature, not a bug. It simplifies everything. It’s Occam’s Razor meets the Gordian Knot. We can just cut through the complexity and unravel the mystery of the economy. Unfortunately for macroeconomics, we can’t figure out which razor to use for cutting the knot.
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In this mainstream view, the opacity of the box is a feature, not a bug. It simplifies everything. It’s Occam’s Razor meets the Gordian Knot. We can just cut through the complexity and unravel the mystery of the economy. Unfortunately for macroeconomics, we can’t figure out which razor to use for cutting the knot.
Mais
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