Mainstream Economists on Policy Uncertainty
Mainstream economics has a tremendous ability to take any substantive idea and transform it into an ooze of technicalities from which an endless stream of competing theoretical and econometric models may be squeezed indefinitely, or until the researchers' fancy shifts to a newer sexy issue on which they can lavish their talent for pyrotechnics. As the researchers push forward their work, it becomes ever more distant from the empirical realities that first gave rise to it, until eventually it evaporates entirely into a debate over conceptual, methodological, and theoretical issues that wafts like a thin, ethereal fog over the real world from which it arose.
I continue to believe that my idea of regime uncertainty is important for understanding how mixed economies function — or fail to function. However, policy uncertainty is not equivalent to regime uncertainty; the former is only a subset of the latter; and all of the latter is important. I continue to note, without great astonishment, that the paper I wrote on this topic in 1997 has somehow evaded the notice of virtually every mainstream analyst who has leaped into this research pond during the past few years. If only I'd pitched my paper in the form of a formal mathematical model complete with some fancy bells and whistles, it might have attracted more notice.