Which Kind are You?

Macroeconomic research and analysis are important if not only to hail the following remarks made by the late zoologist Marston Bates that ... Research is the process of going up alleys to see if they are blind. In this way I feel there are a great many alleys to be discovered in the field of macroeconomic research and analysis, some of them blind but still also some leading to greater understanding. Yet, is there an 'most' effective way to conduct macroeconomic research and analysis? And if so, what is it?

Well, I do think that these questions are a bit too extensive to deal with in depth here on a late Tuesday evening. However, I still want to point to a recently published small paper in Oxonomics by Julia V. Giese in which she juxtaposes macroeconomic research done by and within the private and academic sector (as a plus, she uses a generic topic dear to myself namley the global macroeconomic imbalances) ...

Anyway, here is Julia's conclusion ...

This article seeks to describe two distinct, but linked, ways in which macroeconomic research is conducted in the profession by academics on the one hand and by private sector analysts on the other. Private sector analysis tends to be quicker, because it draws on existing pieces of academic research, and brings them together. In addition, the analyst has to take a view, ideally reaching a clear bottom-line conclusion. The reader has to take away a strong message, and this obliges the investment bank analyst to think through possible reactions of financial markets to certain events. In as much as the research is opinionated, but based on quantitative analysis, private sector research bridges the gap between academic research and commentaries in newspapers. Academics, on the other hand, can take the time not only to use, but advance and test, statistical and theoretical concepts for application in economics. Their peers are the audience who look for original ideas and findings, not marketable advice. There should be mutual interest in the two groups' respective work, but sometimes communication is not as effective as it could be.The benefits for academics include a wider audience, and hence more citations, feedback, and ideas. A clear message stated upfront is imperative to make the research generally accessible. It is therefore important not to lose sight of interpretable results when a discussion of econometric techniques is demanded by the academic reader. Private sector researchers in turn are well advised actively to seek dialogue with their colleagues at universities, possibly in consulting arrangements. An obstacle is that their research is usually available only internally, and almost exclusively for clients. A more accessible working paper series might help to broaden the reach, although it will always involve a fine balance between systemic exclusivity and the exchange of ideas.

Of course the overall line of demarcation drawn by Julia is hardly a surprising one and neither is the call for greater collaboration between the two groups. Yet, I can't help but think that the current and evolving state of the econsphere (i.e. the collective mass of economics blogs) represent, in some ways at least, the ideal Julia is approaching. This is an idealization of course but the dynamics of the econsphere as I see them do indeed exhibit notable synergies between the virtues of private and academic research and analysis methods. In fact, turning to my title question it seems to miss the main point by a mile doesn't it? The answer to the question above should consequently not be one or the other but rather both. There will always of course be boundaries as a function of the individual's job position but as a professional macroeconomist in spe I know what ideal I am aspiring for.