There are no simple mistakes in applied macro, Nick! Unless one counts asking, on a public forum, provocative and far-reaching questions such as: “Is the entire field of applied Macro junk?” Hopefully the next faculty lunch isn’t too awkward.
In my opinion, the simplest refutation of applied macro is that hedge fund managers and other assorted punters have zero interest in the field. If macro models had even the slightest ability to forecast any better than a closed eye and a thumb held at arm’s length, these guys would be drooling over them.
Unfortunately, a lot of careers and prestige currently depend on macro modeling continuing to be taken seriously, and you have to spend a LOT of time studying the friggin things to be able to confidently say that they are crap. Sadly, honest eyebrow raising like this notwithstanding, I fear it may be some time before we can finally snap our MatLab CD’s in half. One funeral at a time, as they say.
So Zdeno, the Troppo Mercedes Sports is yours for this month and is being helicoptered to you as we speak. Here at Troppo, we want you to know we appreciate your efforts. Enjoy.