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I like the comparison between economics and medicine. Both study complex phenomena and both are limited in ways to run experiments (though medicine has much more freedom here).

We all know medicine has found a cure for lots of previously dreadful diseases, like plague, flu, TB. Doesn't mean that no one dies from TB now, but it's a problem with medical service in developing world, not with medical science. And there are issues medicine is still struggling with (AIDS, cancer, aging, etc.)

By analogy, can you give examples of macroeconomic issues which are proven to be curable if properly treated and ones not so curable?

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Friedman's assessment that "inflation is always and everywhere a monetary phenomenon" seems to have substantial concensus around it empirically: (http://www.nber.org/papers/w1453)

I think this essentially gave us the cure for both hyperinflation (don't monetize government spending or the debt more generally) and deflation (print money or do QE until the price level goes up). That isn't to say we've eradicated these "diseases" because we don't always follow the cure. Or even countries should take the cure. Following the cure can be politically untenable and hyperinflation could well be better than revolution.

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  • $\begingroup$ So, to avoid uncontrolled inflation you just need to limit money printing? As simple as not scratching moscito bite however bad it itches. Doesn't seem like a good medicine, but definitely better than not knowing this rule at all. $\endgroup$
    – modular
    Jan 29, 2015 at 0:05

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