The current state of macroeconomics

From Philip Glandon, Kenneth N. Kuttner, Sandeep Mazumder, and Caleb Stroup:

We document eight facts about published macroeconomics research by hand collecting information about the epistemological approaches, methods, and data appearing in over a thousand published papers. Macroeconomics journals have published an increasing share of theory papers over the past 38 years, with theory-based papers now comprising the majority of published macroeconomics research. The increase in quantitative models (e.g., DSGE methods) masks a decline in publication of pure theory research. Financial intermediation played an important role in about a third of macroeconomic theory papers in the 1980s and 1990s, but became less frequent until the financial crisis, at which point it once again became an important area of focus. Only a quarter of macroeconomics publications conduct falsification exercises. This finding contrasts with the year 1980, when these empirical approaches dominated macroeconomics publishing. Yet the fraction of empirical papers that rely on microdata or proprietary data has increased dramatically over the past decade, with these features now appearing in the majority of published empirical papers. All of these findings vary dramatically across individual macroeconomics field journals.

Here is the SSRN link.

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Does DGSE have to count as theory for this pair of sentences to make sense?:

"Macroeconomics journals have published an increasing share of theory papers over the past 38 years, with theory-based papers now comprising the majority of published macroeconomics research. The increase in quantitative models (e.g., DSGE methods) masks a decline in publication of pure theory research"

Really unclear

Agreed. And SSRN seems to be down for me, so I can't find out what they meant... If anyone has another link, that would be appreciated.

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That's how I read it, though i had to read it three times before your post and twice afterward. Some clarity is in order.

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It's just saying that macro is mostly theory, but that the type of theory getting published has changed from data-free theories to data-fitted theories

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One cannot help but notice that historians have stepped into the breach left by what many view as a failure of economists leading up to the financial crisis and the great recession that followed. Some attribute the economists' fall from grace to their obsession with minutiae and inability to see what's in plain view, while others attribute it to ideology and the inability to see the world except through an ideological lens. It doesn't help that much of what's said or published by economists is equivalent to a lawyer's oral argument or brief, which is to say advocacy. Here's a review of one historian's analysis of the crisis and recession: https://www.nytimes.com/2018/08/10/books/review/adam-tooze-crashed.html

It's just saying that macro is mostly theory, but that the type of theory getting published has changed from data-free theories to data-fitted theories.

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Historians tell stories, which is why popular books are often by historians. They don't need to disprove a H0 and the idea that historians don't do advocacy is comic.

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+1

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Fads come and go. I was reading a book on birds, Birkhead et al's "10000 Birds" and you can see that emphasis on defining and collecting avian species and understanding birds back in the 19th century gave way to evolutionary biology and understanding bird habits in the 20th century. Same here: taking about economics ala the "Austrian" school and James Buchanan's though experiment modus operandi which existed simultaneously with "closed form solutions" in economic models (a trend since Samuelson) is giving way to "heuristic" solutions aka "Big Data" models that don't rely on rigid assumptions. However, the p-hacking problem and Bayesian priors problem will eventually haunt this new school of economics it is clear.

Bonus trivia: I'm into pigeon breeding for fun and profit (you can sell pigeons in the Philippines for about five bucks, takes a couple of months to grow them, they don't eat that much either) now. Wild birds are much smarter than tame birds: the sparrows that feed on my chicken, turkey, pigeon food are so hard to catch, they are so wary, but I have set various traps and have caught a few, which I feed to the cat. But only a few. Sparrows are hard to catch, and Birkhead has said birders in the past considered the shotgun, not their camera, their most important tool! And the little sparrow buggers will try and bite you when you catch them, unlike domestic birds which don't even react while you slice their throats.

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Someone should do some research on economic navel gazing.

I'd have fewer objections to this type of research if it actually informed and guided the publication of papers, I.e. recognizing biases and blind spots.

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The argument for "pure theory" that is not "calibrated" with data like DSGE models is that when the theory is confronted with data at least the test is somewhat fair.

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