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A Paper on Emprical Macro which You might find Interesting


dreck

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It's been a while since I started a thread! Maybe this will take your mind off of waiting for decisions.

 

This paper is 20 years old now, but it was part of a set of assigned readings introducing us to contemporary business cycle theory. Basically, Larry Summers is laying some heavy criticism on structural empirical Macro. I know that things have changed a little since 1991; for one thing, the flaws of VARs he illuminates so well are now commonly known, and rebuttals and improvements have come onto the scene. However, while the criticisms he advances are now well-known, some of the approaches he tears apart are still very much a part of empirical macro. In addition, the stuff on how theory and empirics interact runs more deep than a methodological criticism, and I think the paper is worth reading for that reason alone. It's a little pessimistic, nihilistic even, but I think Summers would call it practical.

 

http://www.econ.ucdavis.edu/faculty/kdsalyer/LECTURES/Ecn200e/summers_illusion.pdf

 

Also, if you do a google search, you can find some comments and responses to the paper.

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