Comments on: Economists on the skids Models.Behaving.Badly Fri, 14 Sep 2012 09:10:53 +0000 hourly 1 By: SethOnReuters Thu, 03 May 2012 14:19:11 +0000 Yes, that’s it exactly: almost no one has reliable intuition about macroeconomic policy, so we can’t even tell who has the right ideas.

My favorite version of your skidding intuition analogy is the response to a stall when flying: put the nose down to increase airspeed and lift, which will help regain control. Not just counter-intuitive, but scary-sounding advice. (What? I’m falling out of the sky, and your brilliant Idea is to steer *down*?). I think of that every time I hear the “you can’t solve a debt problem with more debt” argument. Sure sounds logical, but austerity reduces “lift” more (to first order) than it decreases the debt (a more second order effect).

To paraphrase Will Rogers (possibly about Hoover?): it’s not the things people don’t know about macro that worry me, it’s the things they know for sure that just ain’t so.