you can extract meaningful insights about the future and about the present market conditions. That's correct, yes. Up until now, how useful has survey data been? How much has it been incorporated in forecasts both by the private sector as well as by the public sector and institutions like the Federal Reserve? That's a very interesting question. Back in the days, let's say 60 or 70 years ago when the field of macroeconomics was developed after World War II, a lot of what macroeconomists did was to collect survey data and to predict the macroeconomy based on the survey data and the expectations of business people, executives and so on. What happened in the 1970s to the field of economics and macroeconomics in particular is that it became dominated by a very, very important idea called the rational expectations hypothesis, which is the idea that people use their understanding of the economy completely, rationally and efficiently, and that once you have a model of the economy, you don't (5/44)
You are viewing a single comment's thread from: