"Sargent said in a talk here last year that it is simply a methodological mistake to regard any macroeconomic policy action as an isolated episode. The only legitimate way to think of economic policy is as if the government adopts a policy rule (which may have a random element). What he meant was that he can't apply his methods to isolated policy episodes. My reaction is that the man in the street or even the man in the corporation boardroom, looking at the US Congress making macroeconomic policy, regards it as a possibly unstable episode. He not only doesn't know how it is going to come out, he doesn't imagine it to be the application of a policy rule plus a random error."
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Nobel laureates from the United StatesPeople from Los AngelesEconomists from the United StatesNobel laureates in EconomicsUniversity of Pennsylvania faculty
Original Language: English
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Sources
Robert Solow, in Conversations with Economists (1983) by Arjo Klamer
https://en.wikiquote.org/wiki/Thomas_J._Sargent
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Thomas J. Sargent
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