The Failure of Macroeconomic Models and the Housing Bust

Discussion in 'Economy' started by Toro, May 5, 2012.

  1. Toro
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    Toro Diamond Member

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    From Peter Orszag, the former director of the OMB.

    Bad Models Mistook Housing Bust for Dot-Com Bubble - Bloomberg
     
  2. Listening
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    Listening Gold Member

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    It would be great to actually see something from these models....even some sample tables that we could discuss.

    I really struggle with the idea of a useful macroeconomic model, but would at least like to have some data in front of me.
     
  3. EdwardBaiamonte
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    EdwardBaiamonte Gold Member

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    makes no sense to me:

    1) what you read over and over is that no models anticipated a significant drop in housing prices as it had rarely happened over a protracted period. If that drop had been built into the models the broader ramifications of the liberal crash seemingly would have been built in too, if only speculatively.

    2) the tech bust was tiny compared to the liberal housing bust so I don't see the comparison.
     
  4. Listening
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    Listening Gold Member

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    Is the point of this thread that predictive models are meaningless and that we can now shoot all the Keynesians like Krugman and Reich ?
     
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  5. Oddball
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    Oddball BANNED Supporting Member

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    In other words, the models were created from a standpoint of political considerations, rather than from sound economic theory.
     

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