Persuading our Peers
Soren asked why I don’t think predictive accuracy is necessarily the best way to test whether someone is a good economist. First let me point out that economic theory itself predicts that it should almost impossible to make unconditional predictions of asset prices, or to predict the business cycle beyond a few months. So the fact that Irving Fisher didn’t predict the stock market crash, for instance, is totally irrelevant to his ability as an economist. But there is certainly something to Soren’s point. If economic models cannot make at least conditional predictions, what use are they?