The Art and Complexity of Economic Forecasting

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This chapter examines the difficulties in predicting real interest rates within macroeconomic theories, emphasizing the idea that economics may be more art than science. It critiques the hyper-specialization of economists and their reliance on social media and mainstream opinions instead of rigorous analysis. Additionally, the chapter discusses modern monetary theory (MMT), expressing skepticism towards its validity and coherence in addressing government spending and inflation.

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Why might it be the case that "all propositions about real interest rates are wrong"? What, if anything, are most economists wrong about? Does political correctness affect what economists are willing to write about? What are the biggest open questions in economics right now? Is there too much math in economics? How has the loss of the assumption that humans are perfectly rational agents shaped economics? Is Tyler's worldview unusual? Should people hold opinions (even loosely) on topics about which they're relatively ignorant? Why is there "something wrong with everything" (according to Cowen's First Law)? How can we learn how to learn from those who offend us? What does it mean to be a mentor? What do we know and not know about success? What is lookism? Why is raising someone else's aspirations a high-return activity?

Tyler Cowen is Holbert L. Harris Chair of Economics at George Mason University and serves as chairman and general director of the Mercatus Center at George Mason University. With colleague Alex Tabarrok, Cowen is coauthor of the popular economics blog Marginal Revolution and cofounder of the online educational platform Marginal Revolution University. Read more at his website, tylercowen.com.

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