The Game of Monetary Policy

Given the budget is close, let's talk Economics. Here's a model of how to win a Nobel prize in that esteemed discipline. Come up with a macro economic theory, publish it, have it suffiently well accepted that governments use it to set monetary policy.

This is difficult, of course, but at least the programme is clear. It is a model from science: discover something, publish it, help explain the world, add to knowledge.

But what if that was not possible? What if Economics is fundamentally different from Physics, in that the very act of discovering something and using it makes it less likely to correctly predict future behaviour? It could be that the economy does not just change fast, the dynamics change too. The way to understand it next year won't be the way to understand last year, not just because we will know more, but because last year's theories won't work any more.