WHY PRECISION ON MACROECONOMIC VARIABLES IS BAD.I call attention to Volcker’s argument against precision on economic variables because he is correct. Economists and central bankers just don’t know enough and never will. Volcker uses price indices as an example of the measurement problems that are faced in determining macroeconomic policy. And there are other problems—for example, formulating a model of how the economy works at a point in time—that can’t be solved.
Indeed. the most important problem with attempts at precision is that they give a highly misleading picture of the economy.The most important thing to say about economic predictions is that they can never be precise.
Nature doesn’t run very good experiments.