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What do economic models tell us? - Grantham Research Institute on climate change and the environment

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“It is difficult to make predictions, especially about the future” – so goes the saying. The same applies to economic...

What do economic models tell us? Commentary on 6 May, 2014 "It is difficult to make predictions, especially about the future" - so goes the saying. The same applies to economic modelling. This is not just the trite point that it is hard to make predictions about things that are uncertain, though you'd be surprised how many economic models are expressed as deterministic, that is, without probability bounds. Pindyck makes the valid point that key inputs are often chosen arbitrarily; even the best model spits rubbish out if you pump rubbish in . But I want to focus on the slightly more su

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