“…in contrast, if you just look at the economy as a series of variables and equations without any underlying structure, you are almost certain to mistake noise for a signal and may delude yourself (and gullible investors) into thinking you are making good forecasts when you are not. …”
“…. Who needs theory when you have so much information? But this is categorically the wrong attitude to take toward forecasting, especially in a filed like economics where the data is so noisy. Statistical inferences are much stronger when backed up by theory or at least some deeper thinking about their root causes….”
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