Is macroeconomics a mature science?

A couple of months ago, Olivier Blanchard assessed the current state of macroeconomics at the 40^th annual NBER macro conference. While I agree with many of his views, as I often do, I think he is overly optimistic about macro as a mature science.

Funnily enough, he not only surveyed 50 of the most prominent economists about their views on macro as a science, but he also asked Claude AI to come up with criteria of what constitutes a mature science. Here is the list together with his answers and my comments:

1. Established theoretical frameworks. Blanchard: YES. My comment: Yes, macroeconomics, unlike other fields like behavioural finance, has an established theoretical framework. In macro, this is essentially the New Keynesian models that are widely used to model growth, inflation, etc. Where such a widely established consensus theory is still missing is in the important field of behavioural economics, which has described a myriad of psychological deviations from rational behaviour that are at odds with the core assumption of fundamental macro models like the New Keynesian consensus. I am honestly not sure if ignoring tons of empirical evidence is a good way to come up with an ‘established theoretical framework’. So my answer would be yes, but it may not be the right framework.

2. Predictive power. Blanchard: LIMITED. My comment: No. Most macro models are so unreliable in their predictions that they are useless for investors. There is a good ability for macro models to forecast GDP growth, and a couple of slow-moving things. Still, my perspective is that of an investor, and most macro models cannot help you with anything relevant to you. So, no, for investment practitioners, there is no predictive power, but your perspective may differ depending on your job.

3. Methodological consensus. Blanchard: YES. My comment: Yes, I think macroeconomics has an increasing consensus of what constitutes a valid methodology. No disagreement there.

4. Builds systematically on previous findings rather than revisiting previous foundational questions. Blanchard: YES. My comment: If you are in academia, I agree. But in the practitioner world, so many people haven’t updated their knowledge since they left university 20 or 30 years ago, that it is laughable to answer yes to this question.

5. Specialisation and integration. Blanchard: YES. My comment: No, not really. Macro and finance are increasingly split into more granular subfields that are also, in my view, using methods and theories that are increasingly incompatible with each other. So, I believe that while specialisation happens, integrating different subfields does not. And definitely not in the way it happens in engineering or natural sciences.

6. Professional institutions and established educational pathways. Blanchard: YES. My comment: Yes.

7. Practical applications in the real world. Blanchard: YES. My comment: One hedge fund manager once told me, “Macro data is free because you can’t make money with it.” So, no, I disagree.

8. Self-correction mechanism. Blanchard: YES. My comment: If that were the case, we wouldn’t constantly go in circles as we do in much of macro and definitely all of finance. Why is the CAPM still used in models and by some practitioners, to give you just one prominent example? Completely disagree with Blanchard here.

In sum, Blanchard gives macroeconomics a 7.5 out of 8 and calls it a mature science. I would give it 3.5 out of 8 and think of macro as an evolving science. In my darker days, I doubt it is a science at all.