Is Macro Broken – Outline

  • [ Brief summary of the Global Financial Crisis/Great Recession—coming after the Great Moderation (when we though the macroeconomy was under control), this was the worst economic downturn since the Great Depression of the 1930s. ]
  • The Claim that Macro is Broken — What was the claim?  What are the purposes of macro models (academic vs. policy making vs. teaching/learning) Which purposes were said to have failed (and by whom)?
  • [ Brief introduction to DSGE models as “state of the art” prior to the Crisis ]
  • Smets & Wouters as a prototypical pre-crisis DSGE model–empirical implementation of New Keynesian theory
  • Central Bank Models (e.g. Fed)–Smets & Wouters was used by the ECB, but the Fed’s primary policy model wasn’t SIGMA
  • Criticisms of DSGE Models
  • Heterodox Models: Post-Keynesian/Minsky (see Keen)
  • Heterodox Models: Agent-Based Models (see Keen + Economist article)
  • Post-Crisis DSGE Models?
  • CONCLUSIONS (or For vs. Against)