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Do DSGE Models Have a Future?

Author

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  • Olivier Blanchard

    () (Peterson Institute for International Economics)

Abstract

Dynamic stochastic general equilibrium (DSGE) models have come to play a dominant role in macroeconomic research. Some see them as the sign that macroeconomics has become a mature science, organized around a microfounded common core. Others see them as a dangerous dead end. This Policy Brief argues that the current DSGE models are seriously flawed, but they are eminently improvable and central to the future of macroeconomics. To improve, however, they have to become less insular, by drawing on a much broader body of economic research. They also have to become less imperialistic and accept to share the scene with other types of general equilibrium models.

Suggested Citation

  • Olivier Blanchard, 2016. "Do DSGE Models Have a Future?," Policy Briefs PB16-11, Peterson Institute for International Economics.
  • Handle: RePEc:iie:pbrief:pb16-11
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    File URL: https://piie.com/publications/policy-briefs/do-dsge-models-have-future
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    Cited by:

    1. Emiliano Brancaccio & Francesco Saraceno, 2017. "Evolutions and Contradictions in Mainstream Macroeconomics: The Case of Olivier Blanchard," Review of Political Economy, Taylor & Francis Journals, vol. 29(3), pages 345-359, July.
    2. Binder, Michael & Lieberknecht, Philipp & Quintana, Jorge & Wieland, Volker, 2017. "Model Uncertainty in Macroeconomics: On the Implications of Financial Frictions," CEPR Discussion Papers 12013, C.E.P.R. Discussion Papers.
    3. Chatelain, Jean-Bernard & Ralf, Kirsten, 2017. "Publish and Perish: Creative Destruction and Macroeconomic Theory," EconStor Preprints 149994, ZBW - German National Library of Economics.
    4. repec:oup:oxford:v:34:y:2018:i:1-2:p:132-155. is not listed on IDEAS
    5. Joeri Schasfoort & Antoine Godin & Dirk Bezemer & Alessandro Caiani & Stephen Kinsella, 2017. "Monetary Policy Transmission In A Macroeconomic Agent-Based Model," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 20(08), pages 1-35, December.
    6. repec:taf:eujhet:v:24:y:2017:i:6:p:1134-1166 is not listed on IDEAS
    7. Christian Schoder, 2017. "An estimated Dynamic Stochastic Disequilibrium model of Euro-Area unemployment," Working Papers 1725, New School for Social Research, Department of Economics.
    8. repec:eee:enepol:v:117:y:2018:i:c:p:1-13 is not listed on IDEAS
    9. Christian Schoder, 2017. "A Keynesian Dynamic Stochastic Disequilibrium model for business cycle analysis," Working Papers 1701, New School for Social Research, Department of Economics.
    10. repec:kap:decono:v:166:y:2018:i:2:d:10.1007_s10645-018-9320-4 is not listed on IDEAS
    11. Muellbauer, John, 2016. "Macroeconomics and Consumption," CEPR Discussion Papers 11588, C.E.P.R. Discussion Papers.
    12. repec:spr:jbuscr:v:14:y:2018:i:1:d:10.1007_s41549-018-0025-1 is not listed on IDEAS
    13. Javier G. Gómez-Pineda, 2017. "Volatility Spillovers and Systemic Risk Across Economies: Evidence from a Global Semi-Structural Model," Borradores de Economia 1011, Banco de la Republica de Colombia.
    14. Georgiadis, Georgios & Jančoková, Martina, 2017. "Financial globalisation, monetary policy spillovers and macro-modelling: tales from 1001 shocks," Working Paper Series 2082, European Central Bank.
    15. Jochen O. Mierau & Mark Mink, 2018. "A Descriptive Model of Banking and Aggregate Demand," De Economist, Springer, vol. 166(2), pages 207-237, June.
    16. Ricardo Reis, 2018. "Is something really wrong with macroeconomics?," Oxford Review of Economic Policy, Oxford University Press, vol. 34(1-2), pages 132-155.
    17. Fritz Breuss, 2016. "Would DSGE Models have Predicted the Great Recession in Austria?," WIFO Working Papers 530, WIFO.
    18. Jean-Philippe Bouchaud & Stanislao Gualdi & Marco Tarzia & Francesco Zamponi, 2018. "Optimal inflation target: insights from an agent-based model," Post-Print hal-01768441, HAL.
    19. repec:eee:eneeco:v:71:y:2018:i:c:p:273-281 is not listed on IDEAS
    20. Chen, Hongyi & Funke, Michael & Lozev, Ivan & Tsang, Andrew, 2017. "To guide or not to guide? Quantitative monetary policy tools and macroeconomic dynamics in China," BOFIT Discussion Papers 3/2017, Bank of Finland, Institute for Economies in Transition.
    21. Christopher D. Carroll & Edmund Crawley, 2017. "Comment on "When Inequality Matters for Macro and Macro Matters for Inequality"," NBER Chapters,in: NBER Macroeconomics Annual 2017, volume 32, pages 76-92 National Bureau of Economic Research, Inc.
    22. repec:oup:oxford:v:34:y:2018:i:1-2:p:269-286. is not listed on IDEAS
    23. Dimitri Kroujiline & Maxim Gusev & Dmitry Ushanov & Sergey V. Sharov & Boris Govorkov, 2018. "An Endogenous Mechanism of Business Cycles," Papers 1803.05002, arXiv.org, revised Apr 2018.
    24. repec:zbw:ifweej:201815 is not listed on IDEAS

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