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Rathin Roy: Need for simple macro-framework

Rathin Roy

EconomistPaulKrugmanpointstoaninterestingconundrumintheeconomicsprofessioninarecentpost.Youngeconomistsareencouragedtoenterthetheoreticallyseductiveworldofsophisticatedmacroeconomictheorytoexplainbothaggregatedemandandsupplybypostulatingthemicroeconomicbehaviourofagentsandthenmakinguseoffreelyavailabledataandcheapcomputingpowertovalidatetheirpostulations.MrKrugmanpointsoutthattheseinitiativeshavenotyieldedmuchpaybackifoneislookingforoperationalmodelsofthemacroeconomy.Forexample,thecurrentfavourite- ...