Today Christian and I are presenting the critiques of DSGE models, mainly post 2008 global financial crisis! I have attached a link to view the presentation below if you would like to review it and develop questions beforehand. The predominent economists who provided discourse on the topic include Robert Solow, Anton Korinek, Noah Smith, Roger Farmer, Camilo Tovar, Paul Romer, and Paul Krugman.
The critiques that stood out to us include:
- Failing the “Market Test”
- Unrealistic Assumptions and Parameters
- Lack of Financial Sector
- Determination of Causality/Correlation
- Aggregated Microeconomics
The both of will expand on these point more so in class. We encourage you all to ask questions and provide feedback. Several of the critiques will have overlapping ideas but we will provide context in class today on why we decided to put them into separate categories.