The Problem of Influence and Transparency in Modern Economics

Posted: 27 Mar 2008

See all articles by Dalibor Rohac

Dalibor Rohac

Legatum Institute; King's College London

Date Written: March 25, 2008

Abstract

Economic profession exercises an important degree of influence on public policy outcomes. In this paper, we argue that this influence has been used in a non-transparent way. This can become troubling if we realise that economists are likely to have preferences over theories and models. If methods of empirical verification are non-transparent or systematically dysfunctional, empirically irrelevant theories may persists and affect lives of ordinary people. We illustrate our argument on the example of modern macroeconomics, which has experienced a shift towards the use of calibration as the dominant way of confronting theory with data.

Keywords: influence, transparency, empirical verification, calibration

JEL Classification: B22, B41, C15

Suggested Citation

Rohac, Dalibor, The Problem of Influence and Transparency in Modern Economics (March 25, 2008). Available at SSRN: https://ssrn.com/abstract=1113180

Dalibor Rohac (Contact Author)

Legatum Institute ( email )

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King's College London ( email )

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07585303666 (Phone)

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