Here’s a modest proposal. Let’s rename macroeconomics “Central-North American Economic Studies”.
I’m being satiric, of course, but this is only the mirror image of an attitude held by an older generation of economists, who believed that all research should be framed in terms of its relevance to the United States.
Some of this is natural. Economics inevitably takes on the cast of the leading power of the time. The field began with Adam Smith and David Ricardo during the heyday of Briain’s commercial empire. Macroeconomics came of age during the American Century.
But, if you were to pick a country as a representative case for the rest of the world, it would be hard to find a worse example than the United States.
Take as a given, for instance, a central bank that is independent and trying to stabilize output and inflation, rather than goose up the economy in time for the next election. Add in capital markets that are deep and liquid. Toss in historically limitless land reserves, an endless pool of willing migrants, a lack of strong neighbors that want to invade, and you end up with the richest, most powerful country in the world.
Basing most of our policy advice on the experience of the United States would be like doctors prescribing medicine based only on research done on Olympic athletes. But that is precisely what macroecconomics has been doing, and continues to do.
Chart of proportion of global population (x) against proportion of paper subject-countries (y).
Defenders of macro will point out that there is inherent value in studying the world’s largest economy. When the Federal Reserve moves interest rates or the President sends another misguided tweet, the tremors are felt from Mumbai to Melbourne. Returning to our example of the Olympic athletes, it’s also helpful to know what the optimum is if you want to start running competitively. Best practices are useful knowledge.
But America’s share of global GDP has been declining steadily. There are other poles of influence that are starting to assert their weight.
Moreover, if you want to solve the common ailments. Like if you want to lose weight, or your back hurts, you’re more interested in what the research says about the average person. (Ideally you’d like information tailored to your own body, but an average will still be more informative than the ideal.)
People would surely still be interested in “Central-North American Regional Studies”. But the new name would remind them that the policies that work in Central-North America may not work everywhere else.