What We Know, What We Don’t

If all economists were laid end to end, they would not reach a conclusion.

—George Bernard Shaw

The theory of economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, which helps its possessor to draw correct conclusions.

—John Maynard Keynes

The first chapter of this book states that the purpose of macroeconomics is to understand economic events and to improve economic policy. Now that we have developed and used many of the most important models in the macroeconomist’s toolbox, we can assess whether macroeconomists have achieved these goals.

Any fair assessment of macroeconomics today must admit that the science is incomplete. There are some principles that almost all macroeconomists accept and on which we can rely when trying to analyze events or formulate policies. Yet there are also many questions about the economy that remain open to debate. In this last chapter, we briefly review the central lessons of macroeconomics, and we discuss the most pressing unresolved questions.