Reasons to dislike DSGE models First: They are based on unappealing assumptions. Not just simplifying assumptions, as any model must, but assumptions profoundly at odds with what we know about consumers and firms … Second: Their standard method of estimation, which is a mix of calibration and Bayesian estimation, is unconvincing … Third: While the models can formally be used for normative purposes, normative implications are not convincing … Fourth: DSGE models are bad communication devices … Olivier Blanchard Advertisements
Topics:
Lars Pålsson Syll considers the following as important: Economics
This could be interesting, too:
Merijn T. Knibbe writes In Greece, gross fixed investment still is at a pre-industrial level.
Robert Skidelsky writes Speech in the House of Lords – Autumn Budget 2024
Lars Pålsson Syll writes Modern monetär teori
Lars Pålsson Syll writes Problemen med Riksbankens oberoende
Reasons to dislike DSGE models
First: They are based on unappealing assumptions. Not just simplifying assumptions, as any model must, but assumptions profoundly at odds with what we know about consumers and firms …
Second: Their standard method of estimation, which is a mix of calibration and Bayesian estimation, is unconvincing …
Third: While the models can formally be used for normative purposes, normative implications are not convincing …
Fourth: DSGE models are bad communication devices …