The Pros And Consequences Of Macroeconomics

1629 Words 7 Pages
Issue: The crisis of 2007-08 demonstrated that macroeconomics and macroeconomists failed as a social science and a profession.

The objectives of macroeconomics as a social science are twofold: to understand the complex workings and drivers of the global economy through models and predict the economic changes in the near future. Successfully macroeconomists not only grasp the intricate webs of our economy but also are able to advise on policies that would ensure economic stability and prosperity.
The crisis of 2007-08 proved that the macroeconomics framework of regular yet self-correcting economic fluctuations was inadequate to explain the complications of the economy. Since the 1980s and up until the recent crisis, real GDP growth in the United States was much less volatile than in the three decades prior. Peak-to-trough annual GDP growth during the “Great Moderation” was only 11% while the fluctuations
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Edward Lazear, an economist at Stanford, wrote an article in 2000 titled “Economic Imperialism” and attributed it to his field’s rigor. “Economics is scientific; it follows the scientific method of stating a formal refutable theory, testing the theory, and revising the theory based on the evidence,” he wrote. Such is the nature of macroeconomics. Unlike physics or chemistry, there are no absolute laws that govern the way things work in macroeconomics. It’s a social science that continues to evolve every single day with newly discovered evidence by macroeconomists. Whether it is the Great Depression, the Dot-Com bubble burst or the most recent 2008 credit crisis – they have all greatly contributed to the evolution of macroeconomic theories. Macroeconomists will never be 100% confident in their analysis but crises and other events are essential to improving the social science as well as policies that regulate our

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