SMP: Economists are not like doctors

In a recent paper, Ricardo Reis offers an interesting insight in the debate on dynamic stochastic general equilibrium that has taken place in macroeconomics since the 2008 financial crisis. While some economists argue that DSGE modeling is fundamentally flawed, others maintain that because the crisis was unexpected, it is inappropriate to blame such modeling.

Reis admits that DSGE modeling is not perfect and that there is certainly room for improvement. However, he argues, macroeconomics is much more than DSGE modeling. Even if critiques of DSGE modeling are correct, those critiques do not extend to macroeconomics as a field. Reis pushes further the defense of macroeconomics by arguing that it is not the job of macroeconomists to predict crises.

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