Economists can now use old tools to find hidden patterns in complex data

It turns out that identifying structural relationships in economic models with nonlinear variables is no harder than in linear models. This means economists can apply existing methods to understand things like how inflation changes depending on the state of the economy.

For decades, economists thought that if economic relationships were not perfectly straight lines, they needed entirely new ways to figure out cause and effect. This paper shows that many of the old, trusted methods still work. It makes it easier to study how things like interest rates or government spending have different effects depending on the economic situation.