In a new article published in the Socio-Economic Review Philipp Heimberger, Jakob Huber and Jakob Kapeller analyse the role of economic models in shaping narratives and economic policy outcomes. The three economic researchers focus on the European Commission’s ‘potential output’ model, which represents a core pillar of EU fiscal governance as it provides estimates of ‘structural deficits’ and hence the sustainability of member-states’ fiscal policies.
They show how economic models reflect the dominant paradigm and legitimate specific policy programs. You can download the article from the journal website – here.
For our German speaking audience we recommend the excellent article in Makronom, where the authors summarize the main arguments – here.