That's a fair criticism, as far as it goes: it's been said (of Austrians, anyway) that they've predicted 8 of the last 3 recessions.
The thing is, qualitatively, we can say that "old school Keynesian-style aggregate models" are just as bad. The difference is that, rather than modeling based on coldly-rational actors, they're modeling based on (and I quote) "animal spirits". And those models told us that the end of WWII and curtailing war spending was going to usher in a new depression worse than the Great Depression; and that the Sequester and "fiscal cliff" were going to plunge us back into the depths of 2008.
The fact is that both approaches like to pretend that they understand what's happening, but neither really do. Anybody claiming they have an accurate model of macroeconomics is trying to sell you something.
HOWEVER, this is all talk about Macro.
If you take a look at the Micro world, you'll see that Chicago really are the winners. Microeconomics is a solved problem, at least to a first approximation. And the progenitor of that was pretty much Gary Becker - from University of Chicago.
So it's not fair to criticize Chicago when (a) in the micro world, they really have been triumphant; and (b) in the macro world, they're just a different kind of wrong than Keynesianism.
The fact is that both approaches like to pretend that they understand what's happening, but neither really do. Anybody claiming they have an accurate model of macroeconomics is trying to sell you something.
The claim that the U.S. would have grown at the same speed if the sequestration had not gone into effect is a minority view not held by the FOMC, the IMF, or the CBO.
I'm not sure how one would do a study to test a statement so sweeping. But I was probably too glib in any case.
It would be more accurate to say that the framework within which microeconomic phenomena is pretty well understood. While there's still plenty of room for research to fill out all the details, there's very broad consensus about how the answers tend to look. Concepts like price elasticity are well understood and non-controversial.
That stands in sharp contrast to macroeconomics, where even when talking about the same stuff, say, ZIRP, there's fundamental disagreement about what factors we should be researching. (and when I say "we", I mean people that aren't me, 'cause I'm not an economist)
That's a fair criticism, as far as it goes: it's been said (of Austrians, anyway) that they've predicted 8 of the last 3 recessions.
The thing is, qualitatively, we can say that "old school Keynesian-style aggregate models" are just as bad. The difference is that, rather than modeling based on coldly-rational actors, they're modeling based on (and I quote) "animal spirits". And those models told us that the end of WWII and curtailing war spending was going to usher in a new depression worse than the Great Depression; and that the Sequester and "fiscal cliff" were going to plunge us back into the depths of 2008.
The fact is that both approaches like to pretend that they understand what's happening, but neither really do. Anybody claiming they have an accurate model of macroeconomics is trying to sell you something.
HOWEVER, this is all talk about Macro.
If you take a look at the Micro world, you'll see that Chicago really are the winners. Microeconomics is a solved problem, at least to a first approximation. And the progenitor of that was pretty much Gary Becker - from University of Chicago.
So it's not fair to criticize Chicago when (a) in the micro world, they really have been triumphant; and (b) in the macro world, they're just a different kind of wrong than Keynesianism.