The Problem of Influence and Transparency in Modern Economics
Posted: 27 Mar 2008
Date Written: March 25, 2008
Economic profession exercises an important degree of influence on public policy outcomes. In this paper, we argue that this influence has been used in a non-transparent way. This can become troubling if we realise that economists are likely to have preferences over theories and models. If methods of empirical verification are non-transparent or systematically dysfunctional, empirically irrelevant theories may persists and affect lives of ordinary people. We illustrate our argument on the example of modern macroeconomics, which has experienced a shift towards the use of calibration as the dominant way of confronting theory with data.
Keywords: influence, transparency, empirical verification, calibration
JEL Classification: B22, B41, C15
Suggested Citation: Suggested Citation