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Is the Financial System Fit for Purpose?
What do policymakers want from Macroeconomics?
A preliminary exploration
Principal Investigator:Ivan Boldyrev
Assistant Professor of Economic Theory and Policy at Radboud University Nijmegen, Netherlands.
Based on the interviews with applied macroeconomists and practitioners in economic policy, this project deals with the attitudes of policymakers towards macroeconomic theory and expertise. Policymakers use macroeconomics as a framework, which should be approached skeptically and which, however, is of increasing importance. The major factor for improving theory, policy, and theory-policy interaction are believed to be the increase of quality and quantity of empirical data. As of now, the respondents are in agreement that there is a huge room for improvement: the existing data is not readily available; it is sometimes biased; data collected by public entities is often not sufficient. Given the better data, macroeconomic models relevant for policy should be mainly improved in the direction of incorporating more heterogeneity – in consumers, firms, and regions, in expectation formation, and in possible reactions to policies. Applied specifically to the UK, the improved models should address crucial and interrelated policy challenges: stalling productivity, Brexit, climate change, individual and regional inequality. The organizational measures to better integrate economics into the policymaking process should be accompanied by fostering a critical perspective on the foundations and limitations of current macroeconomic models.
What Do Policymakers Want from Macroeconomics?
Ivan Boldyerv | May19, 2021
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