Thoughts on DSGE Macroeconomics: Matching the Moment, But Missing the Point?

13 Pages Posted: 22 Aug 2017

See all articles by Anton Korinek

Anton Korinek

University of Virginia - Department of Economics and Darden School of Business; National Bureau of Economic Research (NBER)

Date Written: July 15, 2017

Abstract

This article critically evaluates the benefits and costs of the dominant methodology in macroeconomics, the DSGE approach. Although the approach has led to great progress in some areas, I argue that its conceptual restrictions, numerical methods, and the resulting complexity have created biases that risk holding back progress in macroeconomics. There is great scope for making renewed progress by judiciously pushing the boundaries of some of these methodological restrictions. A richer set of methodologies would also make macroeconomics more robust and better prepared for new challenges in understanding and governing our economies.

Keywords: DSGE models

JEL Classification: A23, B22, E0

Suggested Citation

Korinek, Anton, Thoughts on DSGE Macroeconomics: Matching the Moment, But Missing the Point? (July 15, 2017). Available at SSRN: https://ssrn.com/abstract=3022009 or http://dx.doi.org/10.2139/ssrn.3022009

Anton Korinek (Contact Author)

University of Virginia - Department of Economics and Darden School of Business ( email )

248 McCormick Rd
Charlottesville, VA 22904
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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