From Real Business Cycle and New Keynesian to DSGE Macroeconomics: Facts and Models in the Emergence of a Consensus

39 Pages Posted: 21 Apr 2015

See all articles by Pedro Garcia Duarte

Pedro Garcia Duarte

University of São Paulo (FEA-USP) - Department of Economics

Date Written: April 10, 2015

Abstract

Macroeconomists have emphasized the force of facts in forging a consensus understanding of business cycle fluctuations. According to this view, rival economists could not longer hold disparate views on the topic because "facts have a way of not going away" (Blanchard 2009). But how can macroeconomists observe the workings of an economy? Essentially through building and manipulating models. Thus the construction of macroeconomic facts – or "stylized facts" – empirical regularities that come to be widely accepted, opens up technical spaces where macroeconomists negotiated their theoretical commitments and eventually allowed a consensus to emerge. I argue that this is an important element in the history of the DSGE macroeconomics.

Keywords: history of macroeconomics, DSGE models, new Keynesian macroeconomics, real business cycles

JEL Classification: B22, B23, E32

Suggested Citation

Garcia Duarte, Pedro, From Real Business Cycle and New Keynesian to DSGE Macroeconomics: Facts and Models in the Emergence of a Consensus (April 10, 2015). Available at SSRN: https://ssrn.com/abstract=2596590 or http://dx.doi.org/10.2139/ssrn.2596590

Pedro Garcia Duarte (Contact Author)

University of São Paulo (FEA-USP) - Department of Economics ( email )

Av. Prof. Luciano Gualberto, 908
Departamento de Economia
Sao Paulo, SP, 05508-010
Brazil

HOME PAGE: http://www.usp.br/feaecon/perfil.php?u=110

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