Articles

This essay 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, it has also created biases and blind spots in the profession that hold back our understanding and our ability to govern the macroeconomy. There is great scope for progress in macroeconomics by judiciously pushing the boundaries of some of the methodological restrictions imposed by the DSGE approach.

The best-known China bear says the emperor is not yet naked, but getting there.

Have economists fallen in love with an idealized vision of an economy in which rational individuals interact in perfect markets? To what extent is standard microeconomics responsible for this state of affairs?