On the future of macroeconomic models

C-Tier
Journal: Oxford Review of Economic Policy
Year: 2018
Volume: 34
Issue: 1-2
Pages: 43-54

Score contribution per author:

1.005 = (α=2.01 / 1 authors) × 0.5x C-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Macroeconomics has been under scrutiny as a field since the financial crisis, which brought an abrupt end to the optimism of the Great Moderation. There is widespread acknowledgement that the prevailing dynamic stochastic general equilibrium (DSGE) models performed poorly, but little agreement on what alternative future paradigm should be pursued. This article is the elaboration of four blog posts that together present a clear message: current DSGE models are flawed, but they contain the right foundations and must be improved rather than discarded. Further, we need different types of macroeconomic models for different purposes. Specifically, there should be five kinds of general equilibrium models: a common core, plus foundational theory, policy, toy, and forecasting models. The different classes of models have a lot to learn from each other, but the goal of full integration has proven counterproductive. No model can be all things to all people.

Technical Details

RePEc Handle
repec:oup:oxford:v:34:y:2018:i:1-2:p:43-54.
Journal Field
General
Author Count
1
Added to Database
2026-01-24