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00:00SUBORDINATED TO THE FEAR LET DEATH. GO PREFERENCES OF LEADERS. PROFESSOR OF ECONOMICS STILL WITH US, HIS ECONOMICS A FAILED PRACTICE? EVERYONE IS FOCUSED ON NUMBERS AND EQUATIONS THAT THERE IS NO POWER OR RELEVANCE TO THE WORLD ANYMORE? >> KNOW, I HOPE THAT IS NOT THE CASE. CRITICISM IS ONE HE IS MAKING FOR QUITE SOME TIME NOW AND IT IS NOT SOMETHING WE HAVE NOT HEARD IN THE WAKE OF THE FINANCIAL CRISIS. IT DOES NOT SEEM THEY WERE ASKING THE RIGHT QUESTIONS. SCARLET: IT IS ALSO DIFFICULT TO FIGURE OUT WHAT YOU ARE MEASURING AND HOW TO MEASURE THE NEW FORCES LIKE TECHNOLOGY, WHERE WE ARE IN UNPRECEDENTED TIMES, ESPECIALLY WHEN CONSIDERING MONITOR POLICY AND PRESCRIPTIONS ARE SO UNUSUAL. WE HAVE DEPARTED FROM THE UNUSUAL PATH AND ARE IN EXPERIMENTAL MODE. TO WHAT EXTENT DOES MACRO ECONOMICS NEED A COMPLETE RETHINK? >> I AM NOT SURE WE NEED TO THROW OUT EVERYTHING THAT IS DONE. YOU WILL FIND INSTEAD THAT WE CAN START USING THE TOOLS WE HAVE TO ASK DIFFERENT QUESTIONS. ONCE WE HAVE NOT THOUGHT ABOUT FOR A WHILE OR ONES THAT DID NOT GIVE THE ATTENTION DESERVED OR THEY WERE WORRIED ABOUT ZERO INTEREST RATE POLICY PRIOR TO THE FINANCIAL CRISIS PUT ON THE RADAR. I DO NOT KNOW IF THE TOOLS NECESSARILY NEED TO GO AWAY BUT WE NEED TO BE MORE OPEN ABOUT CHALLENGING BASIC ASSUMPTIONS AND RATIONAL EXPECTATIONS AND MODELS INCLUDED IN RATIONALITY OR SOMETHING SIMILAR. AND THINKING ABOUT THE ROLE OF FINANCIAL MARKETS MORE. JOE: INSTITUTIONS BUTTRESSED BY ECONOMICS WILL LOSE THEIR CREDIBILITY. YOU THINK ABOUT THE FED IN 2016, SO TRYING TO FIGURE OUT IF I CAN GET INFLATION TO 2%. IS THAT A PART OF THE FUNCTION OF FLAWED EMESIS AND EXTRAORDINARY ACTIVITIES THAT IT DONE SINCE THE CRISIS? >> I AM NOT SO SURE INDICATE -- IN THE CASE OF THE FED. MAYBE THEY'RE TAKING TOO MUCH FAITH.

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Are Macroeconomic Models Still Credible?

Timothy Duy, University of Oregon economics professor, discusses the credibility of macroeconomic models with Bloomberg's Joe Weisenthal and Scarlet Fu on "What'd You Miss?" (Source: Bloomberg)

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