Postprint version. Published in Developments on Experimental Economics: New Approaches to Solving Real-world Problems, January 1, 2007, pages 213-218. Copyright © 2007 Springer. The original publication is available at http://dx.doi.org/10.1007/978-3-540-68660-6.
There have been very few direct applications of experimental techniques in macroeconomics for two main reasons. First, macroeconomics is about the interaction between markets, and it is not easy to design an elegant treatment that gets at the essence of how a national economy functions. Second, there is a vestigial prejudice that favors econometrics over putatively unorthodox empirical approaches. Still, the Nobel Prize-winning economist Edward Prescott is alleged to have said, “Don’t regress; progress!”