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15:00 | Macro Research Seminar
Prof. Gilles Saint-Paul: “The Possibility of Ideological Bias in Structural Macroeconomic Models”
Toulouse School of Economics, France
Author: Gilles Saint-Paul
Abstract: Can ideological bias pervade economic modelling, and yet act in such a way that prevailing models remain consistent with the data? Such biases may explain ongoing controversies among macroeconomists about key structural parameters, in particular (i) the size of the Keynesian multiplier, (ii) the slope of the aggregate supply curve, and (iii) the nature of the shocks that drive business cycles.
This paper studies the trade-offs that an expert with ideological biases faces in designing his model. I assume the perceived model must be autocoherent, in that its use by all agents delivers a self-confirming equilibrium. The exercise is carried in the context of a simplified AS-AD model, where in principle the expert can influence policy by manipulating six key arameters.
Full Text: “The Possibility of Ideological Bias in Structural Macroeconomic Models”
