“THE PRETENSE-OF-KNOWLEDGE SYNDROME.”

“THE PRETENSE-OF-KNOWLEDGE SYNDROME.” The caption of this post comes from an article in the Fall 2010 Journal of Economic Perspectives by Professor Ricardo J. Caballero of MIT which has the title: Macroeconomics after the Crisis: “Time to Deal with the Pretense-of-knowledge Syndrome.” The Journal of Economic Perspectives is directed at professional economists, so this article is part of the conversation of economists. Caballero contrasts two approaches to macroeconomics, which he refers to as “core” and “periphery.” You can think of “core” models as complex, comprehensive and mathematically elegant. Caballero begins a subsection entitled “The Pretense of Knowledge” by saying that “The root cause of the poor state of affairs in the field of macroeconomics lies in a fundamental tension in academic macroeconomics between the enormous complexity of its subject and the micro-theory-like precision to which we aspire.” Core models have great aspirations. You can think of periphery models as acknowledging complexity and being less ambitious.