A notable development in macroeconomics over the last ten years has been the rise of quantitative theory as a research methodology. The production function studies of Douglas, Solow, and Prescott illustrate the approach. Quantitative theory has grown because economists can use it to learn whether basic models capture the main empirical features of actual economies. More detailed evaluation of contemporary macroeconomic models requires a successful blending of the methods of quantitative theory and econometrics.

View Full Article