Tyler Cowen: disagreement

Transcript context

…[laughs] So, the first thing I wanted to ask you about is, you’re an economist, at least originally. And Paul Romer, who’s now, of course, the chief economist at the World Bank, he opened his most recent paper with the assertion that for the last 30 years, macroeconomics has been going backwards. And I looked into this and I realized that Tyler got his PhD exactly 30 years ago. I don’t necessarily want to imply anything causal, but do you agree with Paul? [laughs] I don’t agree with Paul. I think we understand credit crunches much better than we used to. We understand the structure of asset returns and when and why risk matters, compared to earlier times. Models where you have multiple equilibria, where more than one thing can happen, we understand better. I don’t think we’ve solved any ability to predict business cycles or market crashes or Great Recessions. In that sense, there’s not progress, but I think the best theories often imply they’re intrinsically difficult to predict. So I think we ask much better questions, and on that particular issue of science, I’m much more optimistic than is Paul Romer. What do you think of the paper itself and the claims in it?…

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