News
I’ve been reading the FT for months now, and the same thing keeps nagging at me. Start with oil. One piece made the case that this crisis isn’t like the earlier ones, because governments and central banks have run out of policy options to contain the economic fallout. Then trade: the US swapped its earlier tariffs for a flat 15% global tariff. And in the car industry, manufacturers are rethinking their US plans and leaning back towards petrol and hybrids.
Three separate stories, one shared problem. Each of them knocks out an assumption that most economic models lean on without saying so.
Models like to assume that policy will soften a shock. They assume trade rules stay put once they’re written. They assume the move from one kind of energy to the next runs in a fairly straight line. When one of those stops holding, the model doesn’t flag it. It carries on and hands you numbers that look every bit as sure of themselves as before.
That’s the thought behind Schwarz Quant. What if conventional economic models only capture part of the picture? I’m not going to pretend we know what happens next with oil, tariffs or electric cars. We don’t. But we think the better questions start with a different one: which assumptions is this whole thing resting on, and what happens when they give way?
So, which of your own assumptions do you suspect is wearing thin?