Sir David Hendry, the renowned British econometrician, talks to hosts Gene Tunny and Tim Hughes about the state of economic forecasting and the transition to net zero greenhouse gas emissions. Among other things, Sir David talks about how to avoid major economic forecasting failures (e.g. UK productivity), forecasting global temperatures after volcanic eruptions, and the role of nuclear energy in the net zero transition. Sir David is currently Deputy Director of the Climate Econometrics group at Oxford.

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About Sir David Hendry

Sir David F. Hendry is Deputy Director, Climate Econometrics (formerly Programme for Economic Modelling), Institute for New Economic Thinking at the Oxford Martin School and of Climate Econometrics and Senior Research Fellow, Nuffield College, Oxford University. He was previously Professor of Economics at Oxford 1982--2018, Professor of Econometrics at LSE and a Leverhulme Personal Research Professor of Economics, Oxford 1995-2000. He was Knighted in 2009; is an Honorary Vice-President and past President, Royal Economic Society; Fellow, British Academy, Royal Society of Edinburgh, Econometric Society, Academy of Social Sciences, Econometric Reviews and Journal of Econometrics; Foreign Honorary Member, American Economic Association and American Academy of Arts and Sciences; Honorary Fellow, International Institute of Forecasters and Founding Fellow, International Association for Applied Econometrics. He has received eight Honorary Doctorates, a Lifetime Achievement Award from the ESRC, and the Guy Medal in Bronze from the Royal Statistical Society. The ISI lists him as one of the world’s 200 most cited economists, he is a Thomson Reuters Citation Laureate, and has published more than 200 papers and 25 books on econometric methods, theory, modelling, and history; computing; empirical economics; and forecasting.

What’s covered in EP198

Conversation with Sir David:

[00:02:27] Economic forecasting: are we any better at it?
[00:05:56] Forecasting errors and adjustments.
[00:08:04] Widespread use of flawed models.
[00:12:45] Macroeconomics and the financial crisis.
[00:16:30] Indicator saturation in forecasting.
[00:21:02] AI's relevance in forecasting.
[00:24:23] Theory vs. data driven modeling.
[00:28:09] Volcanic eruptions and temperature recovery.
[00:32:26] Ice ages and climate modeling.
[00:37:09] Carbon taxes.
[00:40:10] Methane reduction in animal agriculture.
[00:44:43] Small nuclear reactors: should Australia consider them?
[00:49:08] Solar energy storage challenge.
[00:54:00] Car as a battery.
[00:57:01] Simplifying insurance sales process.
[01:01:19] Climate econometrics and modeling.

Wrap up from Gene and Tim:

[01:03:23] Central bank forecasting errors.
[01:07:12] Breakthrough in battery technology.
[01:11:18] Graphene and clean energy.

Links relevant to the conversation

Climate Econometrics group at Oxford:

https://www.climateeconometrics.org/

Conversation with John Atkins on philosophy and truth mentioned by Tim:

https://economicsexplored.com/2021/10/16/ep109-philosophy-and-truth/

Info on solid state batteries and graphene:

https://www.topspeed.com/toyota-745-mile-solid-state-battery/

https://theconversation.com/graphene-is-a-proven-supermaterial-but-manufacturing-the-versatile-form-of-carbon-at-usable-scales-remains-a-challenge-194238

https://hemanth-99.medium.com/graphene-and-its-applications-in-renewable-energy-sector-333d1cbb89eb

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au.

Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

Needed: Info on Biodiversity Change over Time