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ECONOMIQUES NOIR

One of my favorite economists is Olivier Blanchard.  He is French, has a PhD from MIT where he is also a professor, is the IMF’s Economic Counsellor and head of its Research Department, is movie star handsome and I enjoy saying his name en francais.  He is also very smart.

There is current brouhaha in economics pretty much in response to Queen Elizabeth’s question to a gathering of economists, “How did you miss this (the Great Recession)?  Much, if not most, of the criticism has been directed at the models used by economists to predict the economic future; the so-called dynamic stochastic general equilibrium models, DSGE for short.

Without getting into any of the arcane mathematics of DSGE models and in very few words Olivier Blanchard has nicely described the failure of these models and how the forecasting and policy making tasks can be remedied in Where Danger Lurks.

On the off chance that you would like to dig deeper into this topic let me know and I will provide additional readings.

 

TFM