Well, I’d say, and this is probably a change from what I would have said when I was younger: Have a very healthy respect for the study of economic history, because that’s the raw material out of which any of your conjectures or testings will come.

Once that is accomplished, the recommendation is to go empirical on the past, but not necesserily in the context of a formal model.

History doesn’t tell its own story. You’ve got to bring to it all the statistical testings that are possible. And we have a lot more information now than we used to.

So that’s the new wisdom from the man who brought us the Foundations of Economic Analysis, who had this to say about that classic:

With the Foundations, I looked around for the best bicycle in town. It wasn’t perfect, but it was better than what had been assigned previously.

The interview is in two parts covering everything from Larry Summers through Mankiw, the crisis and much much more, here and here, while a tip of the hat goes to Stephen Kinsella for reading and commenting on the interviews in the first place.

Well, I’d say, and this is probably a change from what I would have said when I was younger: Have a very healthy respect for the study of economic history, because that’s the raw material out of which any of your conjectures or testings will come