Divergences of Measurement and Theory and Some Implications for Economic Policy
Author(s)
Eisner, Robert
Abstract
Macroeconomic analysis has been beset by a “failure to match theoretical constructs with appropriate empirical counterparts,” leading to inordinate confusion in public discourse and policy making. Particular problems arise from relying on current and past values of critical variables as proxies for the future expectations on which outcomes actually depend. We should heed Tjalling Koopman’s warning about the dangers of “measurement without theory” and seek to better reconcile the two.
