Bloomberg Businessweek

How Rational Are Rational Expectations?

The World Bank’s chief economist questions a macroeconomic pillar | “Assume A, assume B … blah blah blah … and so … P is true”

Paul Romer hadn’t planned to trash macroeconomics as a math-obsessed pseudoscience. Or infuriate countless colleagues. It just sort of happened.

In the months before taking over as the World Bank’s chief economist in October, Romer set out to write a paper to celebrate advances in the understanding of what drives economic growth. He soon lost heart. Global growth has been disappointing over

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