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Sustaining the Cowles-Commission Approach to macroeconomic modelling: analytical coherence, unavoidable detail, and the Ray Fair model of the US economy

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  • Vines, David

Abstract

Before DSGE models existed there were large-scale macroeconometric models in the Cowles Commission tradition. In his most recent book Ray Fair provides a clear description of his own model of this kind, a model of the US economy. His exposition provides a compelling defence of this tradition, showing why it is essential that this tradition be sustained. It also contains a hard-hitting critique of DSGE modelling practice. In this short paper I restate Fair’s defence and clarify his criticisms. I show that the issues which he raises go well beyond the details of his own particular model. I use my discussion to articulate the trade-off, which all macroeconomic modellers must face, between analytical coherence and unavoidable detail.

Suggested Citation

  • Vines, David, 2026. "Sustaining the Cowles-Commission Approach to macroeconomic modelling: analytical coherence, unavoidable detail, and the Ray Fair model of the US economy," CEPR Discussion Papers 22006, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:22006
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    JEL classification:

    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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