Contrasting Visions for Macroeconomic Theory: DSGE and OEE

47 Pages Posted: 18 Oct 2017

See all articles by Abigail Devereaux

Abigail Devereaux

Wichita State University, Department of Economics

Richard E. Wagner

George Mason University - Department of Economics; George Mason University - Mercatus Center

Date Written: October 17, 2017

Abstract

DSGE modeling remains the workhorse of contemporary macroeconomics despite a growing number of critiques of its ability to explain the aggregate properties of an economic system. For the most part, those critiques accept the DSGE presumption that traditional macro data are primitive, causal data. This leads to a stipulative style of analysis where macro variables are explained in terms of one another. In contrast, we set forth an OEE framework for an open-ended evolutionary macroeconomics. Within this framework, systems data are not primitive, but are derived from prior micro-level interactions without any presumption that those macro-level derivations reflect systemic equilibrium among the micro-level primitive sources of action. We explore some contours of an OEE model by placing coordination games within an ecological setting where there is no agent who has universal knowledge relevant to that ecology of games.

Keywords: Macro Theory as Systems Theory; DSGE Modeling; OEE Modeling; Generative vs. Stipulative Modeling; Synchronic vs. Diachronic Macro; Ecological Games

JEL Classification: B40; C73; D51; D85; E02; E10

Suggested Citation

Devereaux, Abigail and Wagner, Richard E., Contrasting Visions for Macroeconomic Theory: DSGE and OEE (October 17, 2017). GMU Working Paper in Economics No. 17-35, Available at SSRN: https://ssrn.com/abstract=3054617 or http://dx.doi.org/10.2139/ssrn.3054617

Abigail Devereaux

Wichita State University, Department of Economics ( email )

1845 Fairmount St
Wichita, KS 67260
United States

HOME PAGE: http://abigaildevereaux.com

Richard E. Wagner (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
334 Enterprise Hall
Fairfax, VA 22030
United States
(703) 993-1132 (Phone)

HOME PAGE: http://mason.gmu.edu/~rwagner/

George Mason University - Mercatus Center ( email )

3434 Washington Blvd., 4th Floor
Arlington, VA 22201
United States

HOME PAGE: http://ppe.mercatus.org/scholars/richard-wagner

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