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Beyond DSGE Models: Toward an Empirically Based Macroeconomics

  • Dave Colander


  • Peter Howitt
  • Alan Kirman
  • Axel Leijonhufvud
  • Perry Mehrling

This paper argues that macro models should be as simple as possible, but not more so. Existing models are “more so” by far. It is time for the science of macro to step beyond representative agent, DSGE models and focus more on alternative heterogeneous agent macro models that take agent interaction, complexity, coordination problems and endogenous learning seriously. It further argues that as analytic work on these scientific models continues, policy-relevant models should be more empirically based; policy researchers should not approach the data with theoretical blinders on; instead, they should follow an engineering approach to policy analysis and let the data guide their choice of the relevant theory to apply.

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Paper provided by Middlebury College, Department of Economics in its series Middlebury College Working Paper Series with number 0808.

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Length: 12 pages
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:mdl:mdlpap:0808
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  1. Marco Del Negro & Frank Schorfheide, 2002. "Priors from general equilibrium models for VARs," FRB Atlanta Working Paper No. 2002-14, Federal Reserve Bank of Atlanta.
  2. Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, EconWPA, revised 15 Aug 2002.
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