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‘The timing makes the economics profession feel out of touch and irrelevant’

By Ezra Klein,

“None of the central banks foresaw the financial crisis, none of them foresaw the weakness of the recovery, and none of them had the right policy prescriptions. This lack of ability to predict big shocks and their aftermath is a central flaw of the Sargent-Sims approach. Sargent is well known for his work on rational expectations, which has a tough time with “irrational” booms and busts. And Sims’s work on “vector autoregressions” has a difficult time anticipating sudden shifts in regime, such as the shift from the Great Moderation to the today’s incredible volatility. ... While I’m sure Sargent and Sims deserve their award, the timing makes the economics profession feel out of touch and irrelevant.” — Michael Mandel is not impressed with the new Nobel laureates in economics.

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