IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/105626.html
   My bibliography  Save this paper

Good theories for better models and policies

Author

Listed:
  • D'Elia, Enrico

Abstract

Despite the very strong shocks of the last 15 years, the same paradigm continued to inspire economic policies, which envisages: a single long-term path of development, substantially insensitive to short-term policies; and an economic system composed of almost homogeneous representative agents that react to stimuli in an almost linear way. Policies based on these models can only support, if not amplify, the spontaneous trend of the market and tend to waste huge public resources with inefficient incentive systems. For a sustainable and lasting recovery, it is necessary to adopt a new interpretative paradigm and use different models. The ultra-expansionary monetary policy and the suspension of the Stability and Growth Pact are heading in the right direction, but they are not enough.

Suggested Citation

  • D'Elia, Enrico, 2021. "Good theories for better models and policies," MPRA Paper 105626, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:105626
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/105626/1/MPRA_paper_105626.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Giorgio Fagiolo & Andrea Roventini, 2017. "Macroeconomic Policy in DSGE and Agent-Based Models Redux: New Developments and Challenges Ahead," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 20(1), pages 1-1.
    2. Philipp Heimberger & Jakob Kapeller, 2017. "The performativity of potential output: pro-cyclicality and path dependency in coordinating European fiscal policies," Review of International Political Economy, Taylor & Francis Journals, vol. 24(5), pages 904-928, September.
    3. Joseph E. Stiglitz, 2011. "Rethinking Macroeconomics: What Failed, And How To Repair It," Journal of the European Economic Association, European Economic Association, vol. 9(4), pages 591-645, August.
    4. Weintraub, E Roy, 1977. "The Microfoundations of Macroeconomics: A Critical Survey," Journal of Economic Literature, American Economic Association, vol. 15(1), pages 1-23, March.
    5. Olivier Blanchard, 2018. "On the future of macroeconomic models," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 34(1-2), pages 43-54.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eugenio Caverzasi & Alberto Russo, 2018. "Toward a new microfounded macroeconomics in the wake of the crisis," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 27(6), pages 999-1014.
    2. Benchimol, Jonathan & Bounader, Lahcen, 2023. "Optimal monetary policy under bounded rationality," Journal of Financial Stability, Elsevier, vol. 67(C).
    3. Guerini, Mattia & Napoletano, Mauro & Roventini, Andrea, 2018. "No man is an Island: The impact of heterogeneity and local interactions on macroeconomic dynamics," Economic Modelling, Elsevier, vol. 68(C), pages 82-95.
    4. Lilit Popoyan, 2020. "Macroprudential Policy: a Blessing or a Curse?," Review of Economics and Institutions, Università di Perugia, vol. 11(1-2).
    5. Giovanni Dosi & Mauro Napoletano & Andrea Roventini & Joseph E. Stiglitz & Tania Treibich, 2020. "Rational Heuristics? Expectations And Behaviors In Evolving Economies With Heterogeneous Interacting Agents," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1487-1516, July.
    6. Jean-Luc Gaffard & Mauro Napoletano, 2018. "Hétérogénéité des agents, interconnexions financières et politique monétaire : une approche non conventionnelle," Revue française d'économie, Presses de Sciences-Po, vol. 0(3), pages 201-231.
    7. Dosi, Giovanni & Roventini, Andrea & Russo, Emanuele, 2019. "Endogenous growth and global divergence in a multi-country agent-based model," Journal of Economic Dynamics and Control, Elsevier, vol. 101(C), pages 101-129.
    8. Bence Mérõ, 2019. "Novel Modelling of the Operation of the Financial Intermediary System – Agent-based Macro Models," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 18(3), pages 83-113.
    9. Giovanni Dosi & Andrea Roventini, 2019. "La solitudine dell'agente rappresentativo: eterogeneità e interazione per una nuova macroeconomia (The solitude of the representative agant: Heterogeneity and interaction for a new macroeconomics)," Moneta e Credito, Economia civile, vol. 72(287), pages 249-258.
    10. Zhang, Jinyu & Zhang, Qiaosen & Li, Yong & Wang, Qianchao, 2023. "Sequential Bayesian inference for agent-based models with application to the Chinese business cycle," Economic Modelling, Elsevier, vol. 126(C).
    11. repec:hal:spmain:info:hdl:2441/1gb0ntthu59j4pgf4ju708hsdv is not listed on IDEAS
    12. Jean-Luc Gaffard & Mauro Napoletano, 2018. "Market disequilibrium, monetary policy, and financial markets: insights from new tools," LEM Papers Series 2018/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    13. repec:hal:spmain:info:hdl:2441/28ldm6et9r9pbak4qpf3imo9bj is not listed on IDEAS
    14. Giovanni Dosi & Andrea Roventini, 2024. "Evolutionary Growth Theory," LEM Papers Series 2024/02, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    15. Salle, Isabelle & Seppecher, Pascal, 2018. "Stabilizing an unstable complex economy on the limitations of simple rules," Journal of Economic Dynamics and Control, Elsevier, vol. 91(C), pages 289-317.
    16. Gross, Marco, 2022. "Beautiful cycles: A theory and a model implying a curious role for interest," Economic Modelling, Elsevier, vol. 106(C).
    17. Giovanni Dosi & Andrea Roventini, 2017. "Agent-Based Macroeconomics and Classical Political Economy: Some Italian Roots," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(3), pages 261-283, November.
    18. Andersson, Fredrik N. G., 2020. "Macroeconomic Equilibriums, Crises and Fiscal Policy," Working Papers 2020:21, Lund University, Department of Economics.
    19. Bernardo A. Furtado & Miguel A. Fuentes & Claudio J. Tessone, 2019. "Policy Modeling and Applications: State-of-the-Art and Perspectives," Complexity, Hindawi, vol. 2019, pages 1-11, February.
    20. repec:hal:spmain:info:hdl:2441/46k9rkvut99i7qnn4vqm25t53b is not listed on IDEAS
    21. Vanda Tulli & Mauro Gallegati & Gerd Weinrich, 2019. "Financial conditions and supply decisions when firms are risk averse," Journal of Economics, Springer, vol. 128(3), pages 259-289, December.
    22. Giovanni Dosi & Andrea Roventini, 2019. "More is different ... and complex! the case for agent-based macroeconomics," Journal of Evolutionary Economics, Springer, vol. 29(1), pages 1-37, March.
    23. Hafner, Sarah & Anger-Kraavi, Annela & Monasterolo, Irene & Jones, Aled, 2020. "Emergence of New Economics Energy Transition Models: A Review," Ecological Economics, Elsevier, vol. 177(C).

    More about this item

    Keywords

    Economic Theory; General Equilibrium models; Representative agent; Economic Policy; Incentives; Output Gap; European Fiscal Rules;
    All these keywords.

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H6 - Public Economics - - National Budget, Deficit, and Debt

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:105626. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.