Monday, September 26, 2016

Waldmann ponders

"I have really one question. Given the extreme prominence of the critics of the current orthodoxy, how can the orthodoxy remain an orthodoxy ? In particular, all of the linked authors agree that the current mainstream consists of New Keynesian DSGE models. But collectively they are much more prominent than all New Keynesian DSGE modelers put together."


"It is a puzzle. I think it is clear that the problem is that the DSGE approach which no one likes includes problems which are neither trivial nor impossible. This means that so long as DSGE modeling is accepted by editors of respected journals it will continue to be a very active sub field and much more active than post-post-real macroeconomics. Here I think an important part of the problem is that most economists have (reasonably) concluded that macroeconomics is crap, so macroeconomists are left alone."

Takes a paradigm to beat a paradigm 

These sky gods of  academic economics 
Have no new paradigm to push 

We know what it must include 

Micro foundations 

Like Akerloff -  Stiglitz micro might suggest 

Keep the rationality 

Dis aggregate the rep agent construct

Rational Agents that learn .....

Open systems macro 

Finite life times for agents 

A credit system 
With creditor and debtor agents 

And much else