ABSTRACTWe investigate the applicability of Rodrik’s accounts of model selection and horizontal progress to macroeconomic DSGE modelling in both academic and policy-oriented modelling contexts. We argue that the key step of identifying critical assumptions is complicated by the interconnectedness of the common structural core of DSGE models and by the ad hoc modifications introduced to model various rigidities and other market imperfections. We then outline alternative ways in which macroeconomic modelling could become more horizontally progressive.

Volume 27, Issue 3, September 2020, Page 266-268.

Carbon emission has negative externalities, which will cause severe natural and social problems. In recent years, more and more attention has been paid to carbon emission reduction issue both in academic and application fields. This paper aims to explore the impact of punitive carbon tax and incentive carbon emission reduction subsidy on economy and environment through the dynamic stochastic general equilibrium framework. The results show that both carbon tax and carbon emission reduction subsidy policies can help to reduce carbon emissions (...) and to improve environment quality. In addition, carbon emission reduction subsidy has a positive impact on economy, while carbon tax has the opposite impact. It follows that the incentive carbon emission reduction policy is more conducive to the coordinated development of economy and environment. This research can be a guideline for the government to formulate carbon emission abatement policies from the perspective of coordinated development. (shrink)

The book is very well structured to support practical skills development in understanding DSGE modelling through exercises to graduate a user knowledge on macroeconomic application relevant for policy decisions through use of scientific programs like DYNARE /IRIS, appropriate for use with MatLab/Octave. The author also provided useful references for the more inquisitive reader or practitioner to develop his / her ontological quest for further knowledge in the macroeconomic management of a state (Jackson, 2016). On the basis of relevance of (...) its contents pertaining to theoretical application of macroeconomic policy and management of an economy, I strongly recommend this book to anyone preparing for graduate courses in Economics and related areas like Econometrics, Economic Policy Management and also, to the practitioner-researcher engaged in macroeconomic model construction and policy formulation. (shrink)

Critics argued that the 2007–09 financial crisis was failure of macroeconomics, locating its source in the dynamic, stochastic general-equilibrium model and calling for fundamental re-orientation of the field. Critics exaggerated the role of DSGE models in actual policymaking, and DSGE modelers addressed some criticisms within the DSGE framework. But DSGE modelers oversold their success and even claimed that their approach is the sine qua non of competent macroeconomics. The DSGE modelers and their critics renew an (...) old debate over the relative priority of a priori theory and empirical data, classically exemplified in the Measurement without Theory Debate of the 1940s between the Cowles Commission and the National Bureau of Economic Research. The earlier debate is reviewed for its implications for the recent controversy. In adopting the Cowles-Commission position, some DSGE modelers would essentially straight-jacket macroeconomics and undermine economic science and the pursuit of knowledge in an open-minded, yet critical framework. (shrink)

This article presents an overview and critique of the two leading macroeconomic approaches from the last 70 years: reasoning using high-level aggregates detached from individuals and their choices, and modeling using so-called microfoundations. We judge the validity of both methods, showing their inherent limits and deficiencies as explanatory and predictive tools of economics. We also underline several vital improvements, which are required if the models are supposed to guide policy decisions – even if this means a more modest and less (...) conceited approach. (shrink)

Macroeconomics is evolving in an almost dialectic fashion. The latest evolution is the development of a new synthesis that combines insights of new classical, new Keynesian and real business cycle traditions into a dynamic, stochastic general equilibrium model that serves as a foundation for thinking about macro policy. That new synthesis has opened up the door to a new antithesis, which is being driven by advances in computing power and analytic techniques. This new synthesis is coalescing around developments in complexity (...) theory, automated general to specific econometric modeling, agent-based models, and non-linear and statistical dynamical models. This book thus provides the reader with an introduction to what might be called a Post Walrasian research program that is developing as the antithesis of the Walrasian DSGE synthesis. (shrink)

This insightful Modern Guide offers a broad coverage of questions and controversies encountered by contemporary economists. A refreshing approach to philosophy of economics, chapters comprise a range of methodological and theoretical perspectives, from lab and field experiments to macroeconomics and applied policy work, written using a familiar, accessible language for economists. Highlighting key areas of methodological controversy, the Modern Guide looks at estimating utility functions in choice data, causal modelling, and ethics in randomised control trials. Chapters further explore topical issues, (...) including: economists' attitudes to other disciplines; gender bias in economic research; methods of modelling social influence in economics; behavioural welfare economics; anti-poverty policy controversies; and inflexible reliance on DSGE models in macroeconomics. Furthermore, it explores the implications of the last financial crisis for macroeconomic confidence, and ways to adapt abstract theory to everyday policy advice. Avoiding philosophical jargon, and with the majority of chapters written by economists, this Modern Guide will challenge economists and scholars of philosophy of economics to engage with different approaches to the topic. This will also be a useful tool for policy makers administering nudges, development initiatives, macro-forecasting and monetary policy."--Publisher's description. (shrink)

Dans cet article, nous proposons une analyse critique du nouveau consensus monétaire (NMC) d’un point de vue méthodologique, afin d’évaluer sa pertinence. Bien que les mantras du consensus ne soient pas contestables en tant que tels, nous soutenons l’idée que les fondements méthodologiques du NMC expliquent son échec paradigmatique à prévoir la crise financière de 2008, et à constituer une source d’inspiration fiable pour les politiques post-crise 2008. Nous mettons particulièrement l’accent sur la nature problématique des modèles pré-crise 2008. Nous (...) concluons que le nouveau consensus monétaire a cessé d’être pertinent plus de dix ans après le début de la crise mondiale. (shrink)