The Cournot Centre series
Edited by Robert M. Solow and Jean-Philippe Touffut
Chapter 8: Round table discussion: where is macro going?
Robert M. Solow (MIT) A round table about the current state or the future of macroeconomics should not start from the opposition of good and bad models. Even the simplest fundamentalist dynamic stochastic general equilibrium (DSGE) models contain a certain amount of ordinary common-sense economics that no one would be against in principle. In response to criticism, the naive versions of that kind of model have been fixed up with some financial intermediation, with sticky prices, with what are now called ‘rule-of-thumb’ consumers. It is better not to try to take positions for or against the whole school of modelling, which has good things and bad things about it, but to try to be careful about what characteristics of that modelling style one likes or doesn’t like.
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