Is the Financial System Fit for Purpose?
What do policymakers want from Macroeconomics?
A preliminary exploration
Principal Investigator: Ivan Boldyrev
Ivan Boldyrev is an Assistant Professor of Economic Theory and Policy at Radboud University Nijmegen, Netherlands. He previously was a research fellow at University of Bochum and a postdoc research fellow at Witten/Herdecke University. His key areas of investigation are history, sociology, and philosophy of economics
Economics – and especially macroeconomics – is often referred to as a policy science. But its exact status in policymaking is ambiguous. On the one hand, economists are considered to be among the most influential social scientists. Their advice is sought for, they inform public discourse and advise the governments, technically and ideologically, all over the worlds. On the other hand, macroeconomics has often come under attack, both external and internal, for its blatant inadequacy in many real-world settings. So far, the research dealing with this ambiguity, was mainly focused on the academic part of the story – that is, on economists supplying more or less useful knowledge. But what is happening on the side of policy-makers, that is, on the demand side of macroeconomic expertise?
It is well known that economists and policymakers face different problems and constraints, and it is not always easy to find a common ground. Part of the problem seems to be information asymmetry. Macroeconomics and policy change a lot, but the factors of change differ, and continued sustained effort is needed to translate academic results into policy prescriptions. A countermovement is no less significant, especially in the moments of high uncertainty, when macroeconomic explanations and forecasts are more needed than ever.
What do policymakers perceive as deficiencies of current macroeconomics knowledge? What can current macroeconomic expertise contribute to meet the challenges policymakers of various sorts face at different levels of decision-making? How do the trade-offs encountered by macroeconomists fit the perceived concerns of policymakers? How is the current pandemic shock shaping the science-policy nexus? The project addresses these questions through a series of expert interviews (with focus on the UK). They will be conducted in order to produce a more detailed picture of the ideational background of current macroeconomic policy to verify the ideas from the (now quite voluminous) literature on macroeconomics and policy-making. The questions to be addressed will help identify the ways various policy-makers acquire, process, and apply macroeconomic knowledge, specify the contexts of these interactions, and detail the difficulties and challenges to be faced by current macroeconomics across the policy spectrum. Apart from reconstructing the general frame in which various actors in macroeconomic policy are operating, it should also provide direct feedback as to their demand for macroeconomic knowledge, provoking them to translate their general concerns and challenges into more specific questions to be posed to macroeconomists. The project combines insights from macroeconomics, sociology of economic expertise, and studies of economic policy-making. It should eventually contribute to improving the dialogue between science and policy. By highlighting macroeconomic problems from the policymakers’ perspective and pointing to academic directions, which policymakers consider important, it should help realistically reconsider the priorities of current macroeconomics.