Economic models: the past, present and future?

Abstract

This paper outlines a sociological perspective on the usefulness of economic models in assessment and policy-making. It combines an overview of the history of macro-economic modelling research in the UK with insights drawn from the author's own research into the economic forecasts and policy recommendations made by the Panel of Independent Forecasters to the UK Government during 1993. It argues that one of the most important achievements of the Panel was to communicate some of the diversity and excitement of its economic (and econometric) models. The more recent policy of giving operational responsibility for interest rate decisions to the Bank of England may have the opposite effect, and creates the potential for a ‘closed’ institutional space within which a particular economic analysis may be uncritically accepted.

Keywords:

• economic assessment
• models
• policy