Fed Researchers Suggest That Two Core Models Used by Economists Are Seriously Flawed
نویسنده
چکیده
Models are the test jets of modern economics. As mathematical representations of economic theory, they allow economists to see if their ideas can take flight in the face of reality. Like the Wright brothers, whose models contended with gravity, wind and a host of other real-world variables, economists test their theoretical models against the concrete realities of taxes, interest rates, hours worked and so on. When models fail to match data, the theories behind them may crash and burn. With luck, the model will just need a bit of tinkering—a thicker wing, an altered parameter.
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