Is the Economy "Predictable"?

Although "predictable" is often the word used (or at least implied) in such queries, perhaps the question "Is the Economy 'Modelable' " would be more appropriate.

Here's a recent WSJ opinion piece by Ed Phelps, 2006 Economics Nobel prizewinner, titled "Our Uncertain Economy." Lots of comments and references here which are relevant to modeling the economy and financial markets -- and to some recent UIUC classes. Earlier this semester, in our Financial Mathematics graduate minicourse (and, more briefly, in Math 476 last semester), we talked about mean-reverting stochastic process models. Phelps's references to the "natural" levels of interest rates and unemployment, and the difficulty of identify those values, are particularly germane to the parametrization of such models.

- Rick