Sunspots

“Drawing on archives, interviews and bibliometric evidence, we explain why this loose community [sunspot macroeconomists] came to use several modeling strategies, including overlapping-generation models (hereafter OLGs), Arrow-Debreu framework with restricted participation, game theory or chaotic dynamics. They also developed overlapping yet distinct vocabularies, including sunspots, animal spirits, self-fulfilling prophecies. They exhibited various intellectual and institutional trajectories in which multiple equilibria models or such and such modeling strategy is just one stage. We also outline factors to explain why these models have remained on the fringe of the discipline during the 1980s. They were perceived by macroeconomists to be ultra-sophisticated limit cases devoid of practical relevance, they had no empirical dimension, and they were neglected until very recently by policy-makers, in particular central bankers”

The indeterminate fate of sunspots in economics
Authors: Beatrice Cherrier, Aurélien Saïdi
From: Université de Caen – Université Paris Ouest – Nanterre
May 2017 version

Assous and Duarte argue that while sunspot macroeconomists were emarginated the endogenous fluctuations literature has been influential on the issue of policy stabilization and the spread of of infinite-lived agent models.
“…in the late 1970s and 1980s, several economists challenged Lucas with flexible prices models and eventually became key contributors to the DSGE literature. By illuminating the context of particular dynamic models of the early 1980s and why central players switched from OLG to infinite-lived agents models, our paper enriches our understanding of the origins of the DSGE literature.”
Challenging Lucas: From Overlapping Generations to Infinite-Lived Agent Models
Authors: Michaël Assous, Pedro Garcia Duarte
From: University of Paris 1, Pantheon-Sorbonne – University of São Paulo