Publications: Notes at the Margin

Models Have Never Been More Useless (May 5, 2014)

 

Those who rely on predictions from large and small econometric models are being surprised at every turn. Those who use the models to plan investments need to rethink this practice before predators put them out of business. Those who rely on them to plan economic policies—whether at central banks or treasury departments—also need to reconsider before they are forced to take precipitous actions that create undesired consequences such as recessions. Mathematical and statistical models are instruments of the past. Now is the time to look for new approaches. This week's report explains.

 

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