On Macroeconometric Models
By Arnold Kling
the Congressional Budget Office can reasonably estimate the effect of economic and policy scenarios on components of the government’s budget, including taxes and spending. However, it cannot reasonably estimate the effect of tax and spending changes on the overall economy. The CBO adds value to policy makers by “scoring” the impact of policies on the budget. However, the “scoring” of policies in terms of GDP growth or jobs saved is of no value. The CBO should simply refuse to do it, and the consulting firms that purport to provide such estimates should be regarded as the charlatans they are.
My “science of hubris” paper gets into more detail. However, it is still difficult to obtain (although I recommend subscribing to Critical Review). But the essay linked above sketches some of the important problems with macroeconometric models.