Macroeconomic theories: not even wrong

Flawed and inconsistent mainstream macroeconomic theories such as efficient market hypothesis are dangerous to society, says Alexander Lipton

stochastic-models
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Alexander Lipton is a Connection Science Fellow at MIT and an Adjunct Professor of Mathematics at NYU.

Austria-born physicist and Nobel prizewinner Wolfgang Pauli, who was well known for his dry wit and sharp tongue, once described a theory as "not even wrong" – that is, it was so fundamentally flawed that it could not even be used to make meaningful predictions.

Today, the same could be said about mainstream macroeconomic theories – including the dynamic stochastic general equilibrium model (DS

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