Academic

MEGAN MCARDLE: The Sad State of Economic Modeling. It?s fine to say ?Our best guess is that TARP?

By Glenn Reynolds

MEGAN MCARDLE: The Sad State of Economic Modeling.

It’s fine to say “Our best guess is that TARP and the stimulus did some good. But it’s well to remember that our best guess really isn’t very good. And putting an exact number on it–”3.1 million jobs created or saved!” creates a dangerous false precision, giving people the illusion that we have good knowledge in a very foggy area.

Indeed, it’s worth reflecting on the fact that the simulation the Fed ran–and a million others run by regulators, bankers, and investors–probably made the bubble, and the resulting crash, much worse. People thought they knew something they didn’t, and it made them complacent.

Indeed.

Full post as published by Instapundit.com on October 02, 2010 (boomark / email).