Thursday , November 21 2024
Home / Lars P. Syll / Reasons to dislike DSGE models

Reasons to dislike DSGE models

Summary:
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:

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

Reasons to dislike DSGE modelsFirst: 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
Lars Pålsson Syll
Professor at Malmö University. Primary research interest - the philosophy, history and methodology of economics.

Leave a Reply

Your email address will not be published. Required fields are marked *