relMacroeconomists build theories codified by systems of equations. We use those equations to explain patterns in economic data. Unlike experimental sciences, chemistry and physics for example, macroeconomists cannot easily experiment. That does not mean that we cannot challenge existing theories, but it makes it much harder. Like astronomers waiting for the next supernova to explode; macroeconomists must wait for big recessions or large bouts of stagflation to help us sort one theory from another …

Macroeconomists can explain past data relatively well. But we are not very good at explaining new events and our theories are always evolving. In that sense, economics is a science. The way that our models are allowed to evolve is controlled by a group of high-priests who maintain doctrinal purity. In that sense, economics is a religion. The religious aspect is important during normal times, when we have not recently experienced a big event. At other times, after we observe an economic supernova, the grip of the high-priests becomes counterproductive and it is a fertile time to explore ideas that the priesthood considers heretical. Now is one of those times.

Roger Farmer