In defence of DSGE models
People who don’t like dynamic stochastic general equilibrium (DSGE) models are dilettantes.
Christiano ad al. review the state of DSGE models before and after the financial crisis and conclude that there are no other credible alternatives to policy analysis than the DSGE models.
On DSGE Models
Authors: Lawrence J. Christiano, Martin S. Eichenbaum, Mathias Trabandt
From: Northwestern University – Freie Universität Berlin
Responses to the Christiano and al. paper
30 years of DSGE research have produced exactly one empirically plausible result — the expectations-augmented Phillips Curve.[…] The breakdown of the Phillips Curve now — in the other direction — leaves DSGE with precisely zero verifiable achievements.
Dilettantes shouldn’t get excited
By: Jo Michell – UWE, Bristol
If substantive questions about the real world are being posed, it is the formalistic-mathematical representations utilized that have to match reality, not the other way around. The modelling convention used when constructing DSGE models makes it impossible to fully incorporate things that we know are of paramount importance for understanding modern economies…
DSGE models are missing the point
By: Lars Syll – Malmö University
