The Public Interest

Growth economics vs. macroeconomics

David P. Goldman

Fall 1991

QUESTION: WHY DO American policymakers subject their proposals to the judgment of macroeconometric models whose own defenders liken them to geocentric astronomy after Copernicus? Professor N. Gregory Mankiw of Harvard recently defended Keynesian macroeconomies as follows:

At the time it was proposed and for many years thereafter, the Copernican system did not work as well as the Ptolemaic system. For predicting the positions of the planets, the Ptolemaic system was superior ... if you had been an applied astronomer, you would have continued to use the Ptolemaic system.

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