Statistical Hubris: Premature Triumphalism and the Great Moderation

For my continuing research* into national economic accounting, I am reading a fantastic short piece from 2000 entitled “GDP: One of the Greatest Inventions of the 20th Century” published by the Bureau of Economic Analysis. The paper contains a choice quote that reflects the optimism of the time, when economists really believed that big macroeconomic fluctuations were solved problems, in part with the aid of better data:

The bank runs, financial panics, and depressions that were recurring problems before World War II became a thing of the past. The business cycle was not eliminated, but its severity was curtailed. The post-war success was based on a more stable economic environment that was due in significant part to the timely, comprehensive and accurate data on the economy provided by the national accounts.

Oops.

* Much like the transition from The Original Series, to The Next Generation, I feel like my research project is no longer a “5 year mission” but rather a continuing one…

Advertisements
Comments are closed.