Volker Wieland on the role of forecasts in economics ("Bloomberg")

"One of the biggest things that economists get grief about is their failure to predict big events like recession", Bloomberg's Noah Smith writes citing from an IMFS Working Paper by Volker Wieland and Maik Wolters.

In their IMFS Working Paper No. 62 (2012) on "Forecasting and Policy Making" Wieland and Wolters investigate the role of forecasts, showing "how badly economists' models failed to predict the Great Recession". According to Bloomberg, the debate misses the point. In Smith's opinion, forecasts aren't the most important thing in science. A theory will rather describe things that are already known and " describe them in terms of other things that we thought were totally separate, unrelated phenomena", Bloomberg's Noah Smith goes on.

Bloomberg view: "Economists' Biggest Failure"

IMFS Working Paper No. 62 "Forecasting and Policy Making" (PDF)