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DSGE And Beyond – Computable And Constructive Challenges

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  • K. Vela Velupillai

Abstract

The genesis and the path towards what has come to be called the DSGE model is traced, from its origins in the Arrow-Debreu General Equilibrium model (ADGE), via Scarf's Computable General Equilibrium model (CGE) and its applied version as Applied Computable General Equilibrium model (ACGE), to its ostensible dynamization as a Recursive Competitive Equilibrium (RCE). An outline of a similar nature, albeit very briefly, of the development and structure of Agent-Based Economics (ABE) is also included. It is shown that these transformations of the ADGE model are computably and constructively untenable. Suggestions for going 'beyond DSGE and ABE' are, then, outlined on the basis of a framework that is underpinned -from the outset- by computability and constructivity consideration

Suggested Citation

  • K. Vela Velupillai, 2011. "DSGE And Beyond – Computable And Constructive Challenges," ASSRU Discussion Papers 1122, ASSRU - Algorithmic Social Science Research Unit.
  • Handle: RePEc:trn:utwpas:1122
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    File URL: http://www.assru.economia.unitn.it/files/DP_10_2011_II.pdf
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    References listed on IDEAS

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    1. K. Vela Velupillai, 2008. "Uncomputability and Undecidability in Economic Theory," Department of Economics Working Papers 0806, Department of Economics, University of Trento, Italia.
    2. Gilboa, Itzhak, 2012. "Rational Choice," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262518058, January.
    3. Takashi Negishi, 2008. "Unnoticed predecessors of the early Negishi theorems," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(2), pages 167-173.
    4. K. Vela Velupillai, 2011. "The Phillips Machine, the Analogue Computing Tradition in Economics and Computability," Economia politica, Società editrice il Mulino, issue 1, pages 39-62.
    5. Kumaraswamy Velupillai, "undated". "The Computable Approach to Economics," Working Papers _005, University of California at Los Angeles, Center for Computable Economics.
    6. K. Vela Velupillai, 2011. "Towards An Algorithmic Revolution In Economic Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 25(3), pages 401-430, July.
    7. Tesfatsion, Leigh & Judd, Kenneth L., 2006. "Handbook of Computational Economics, Vol. 2: Agent-Based Computational Economics," Staff General Research Papers Archive 10368, Iowa State University, Department of Economics.
    8. Scarf, Herbert E., 1993. "The computation of equilibrium prices: An exposition," Handbook of Mathematical Economics,in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 21, pages 1007-1061 Elsevier.
    9. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, August.
    10. Leigh Tesfatsion, 2002. "Agent-Based Computational Economics," Computational Economics 0203001, University Library of Munich, Germany, revised 15 Aug 2002.
    11. Takashi Negishi, 1961. "Monopolistic Competition and General Equilibrium," Review of Economic Studies, Oxford University Press, vol. 28(3), pages 196-201.
    12. K. Vela Velupillai, 2005. "The foundations of computable general equilibrium theory," Department of Economics Working Papers 0513, Department of Economics, University of Trento, Italia.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. DSGE And Beyond – Computable And Constructive Challenges
      by Christian Zimmermann in NEP-DGE blog on 2011-07-26 01:20:39
    2. DSGE And Beyond – Computable And Constructive Challenges
      by Christian Zimmermann in NEP-DGE blog on 2011-07-26 01:20:39

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    Cited by:

    1. Chen, Shu-Heng & Chang, Chia-Ling & Wen, Ming-Chang, 2014. "Social networks and macroeconomic stability," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 8, pages 1-40.
    2. Chen, Shu-Heng & Chang, Chia-Ling & Tseng, Yi-Heng, 2014. "Social networks, social interaction and macroeconomic dynamics: How much could Ernst Ising help DSGE?," Research in International Business and Finance, Elsevier, vol. 30(C), pages 312-335.

    More about this item

    Keywords

    Computable General Equilibrium; Dynamic Stochastic General Equilibrium; Computability; Constructivity; Classical Behavioural Economics;

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • 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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