From international trade to interest rates, macroeconomics is in yet another tail spin

In response to the Office for Budget Responsibility (OBR) calculation that a new trade deal between the UK and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) would only add 0.08% to the size of the UK economy, despite the fact that the share of CPTPP countries' world outputnot including India and Chinais near to that of the European Union, Paul Ormerod argues that the UK trade perspective reveals shortcomings in contemporary understanding of macroeconomics. Whereas microeconomics has made a lot of progress over the past thirty years to understand how individuals and companies behave, the same cannot be said of macroeconomics. Ormerod points to the illustration of this provided by co-founders and co-directors of the Abdul Latif Jameel Poverty Action Lab (J-PAL) and Nobel Laureates, Abhijit Banerjee and Esther Duflo, in their book 'Good economics for hard times'.

City AM