Cheat-Seeking Missles

Saturday, November 18, 2006

Machro-Econ Models and Global Warming

With Milton Friedman's recent death, this post on Econlog from April 16, 2006 seems particularly pertinent:
My concern is with how "scientific consensus" is reached. In economics in the 1960's, there was a "scientific consensus," embedded in sophisticated macro-econometric models, that inflation reflected a competition over income shares, and that government policies to interfere with wage- and price-setting were the solution. Milton Friedman's contrary views were outside the "scientific consensus."

By 1985 or so, the "scientific consensus" had shifted, in part because policies based on that consensus were tried in the 1970's, leading to the worst macroeconomic performance of the post-war period.

By the 1990's, large macro-econometric models had pretty much disappeared from the economics literature. The problem with macro-econometrics is that the models continually broke down out of sample. That is, a model estimated through 1969 would work terribly in predicting the early 1970's. A model estimated through 1975 would work terribly in predicting the late 1970's, and so on.

Milton Friedman's dissenting views of 1967 are close to the consensus views today.

I wish that climate-change models did not remind me so much of macro-econometric models. I wish that the contempt that the Left expresses for dissenting views in climate science did not remind me of the contempt that the Left expressed for Milton Friedman. ...

I worry that the environmentalists are motivating themselves to stage a religious war over global warming. My guess is that mankind will not be well served by such a religious war.

Global warming fear is predicated on computer models that extrapolate disasters, not on current evidence, which is not disasterous. How long after the models are proved wrong will the Warmies hang on to their attack?

hat-tip: Greenie Watch

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