For some reason I feel compelled to return to this topic:
My point is not that macroeconomics is a great field filled with great insights (it’s not and most macro theorists are terribly confused) but that it’s not as ridiculous as you seem to imagine it that some economists have novel, interesting and true things to say about inflation, unemployment, GDP etc and are not themselves fabulously wealthy.
(1) For example, some macroeconomic theories predict behaviors like the parable of the babysitting co-op. You can also run experimental economies (like this) and make predictions about the behavior of the economy.
I might set up a play economy where different people produce different goods and trade and consume them. Money is traded but not produced. We let this economy do its thing for a while and then suddenly (and without announcing in advance) give everyone 20% more money. Using my favorite macro theory I could make a number of interesting and novel predictions about what will happen (after a long time, prices will be 20% higher; in the short run people will devote more resources to producing traded goods instead of traded goods). Because this is basically irrelevant to the workings of the real economy, my predictions will be both more accurate than market predictions as well as useless for making money in financial markets.
Such theories would also make predictions about how good of an idea it would be to transition to a different monetary regime (say a competitive currency regime).
(2) As I said before, if traders approximate the parts of your model that are directly applicable then you don’t have any useful information advantage.
(3) Sure, and there’s plenty to be skeptical of in mainstream macro, but that doesn’t imply unlimited skepticism.
For some reason I feel compelled to return to this topic:
My point is not that macroeconomics is a great field filled with great insights (it’s not and most macro theorists are terribly confused) but that it’s not as ridiculous as you seem to imagine it that some economists have novel, interesting and true things to say about inflation, unemployment, GDP etc and are not themselves fabulously wealthy.
(1) For example, some macroeconomic theories predict behaviors like the parable of the babysitting co-op. You can also run experimental economies (like this) and make predictions about the behavior of the economy.
I might set up a play economy where different people produce different goods and trade and consume them. Money is traded but not produced. We let this economy do its thing for a while and then suddenly (and without announcing in advance) give everyone 20% more money. Using my favorite macro theory I could make a number of interesting and novel predictions about what will happen (after a long time, prices will be 20% higher; in the short run people will devote more resources to producing traded goods instead of traded goods). Because this is basically irrelevant to the workings of the real economy, my predictions will be both more accurate than market predictions as well as useless for making money in financial markets.
Such theories would also make predictions about how good of an idea it would be to transition to a different monetary regime (say a competitive currency regime).
(2) As I said before, if traders approximate the parts of your model that are directly applicable then you don’t have any useful information advantage.
(3) Sure, and there’s plenty to be skeptical of in mainstream macro, but that doesn’t imply unlimited skepticism.