Here.
Excerpt:
"outside this community, the picture is different. In the media – even in a magazine like The Economist or a newspaper like The Financial Times – macroeconomics seems to have lost whatever luster it had before. With respect to the economic profession at large, present-day macroeconomics seems to stand on the sideline. With the rise of different types of experimental research lines, the economics profession has indeed drifted away from the high-brow theoretical style embraced by DSGE macroeconomics."
And
"In an above quote, Kehoe et al. depict DSGE macroeconomics as a big tent, which suggests that everybody is welcome. This is false. The standards for ‘good’ theoretical practice as enunciated by Lucas and soon adopted by the profession act as a barrier to entry. They are as follows: general equilibrium analysis, the stability postulate, explicit microfoundations, the intertemporal equilibrium concept, rational expectations, the impulse/propagation approach, stochastic shocks, and empirical verifications. Taking these bifurcations is regarded as a sine qua non for good theoretical practice. Notice that perfect competition, perfect information, the representative agent assumption, monetary aspects, and any specific trade technology assumptions do not belong to this set of standards. The strength of the DSGE program then lies in its subtle combination of rigidity and flexibility. The above standards are constitutive of its identity. For the rest, internal criticism is the rule of the game, the fuel of the development of the program. The big tent analogy must be understood as meaning ‘internal criticism is welcome.’ No assumption is sacred as long as the standards are respected. Some are indeed outrageous – e.g. the representative agent assumption. Their justification is tractability and the view that theory construction must proceed step by step – even if removing outrageous assumptions can take decades. All this is underpinned by the fact that general equilibrium analysis faces constraints that are absent from partial equilibrium analysis."
From:
Michel De Vroey
Université catholique de Louvain January 2019
Excerpt:
"outside this community, the picture is different. In the media – even in a magazine like The Economist or a newspaper like The Financial Times – macroeconomics seems to have lost whatever luster it had before. With respect to the economic profession at large, present-day macroeconomics seems to stand on the sideline. With the rise of different types of experimental research lines, the economics profession has indeed drifted away from the high-brow theoretical style embraced by DSGE macroeconomics."
And
"In an above quote, Kehoe et al. depict DSGE macroeconomics as a big tent, which suggests that everybody is welcome. This is false. The standards for ‘good’ theoretical practice as enunciated by Lucas and soon adopted by the profession act as a barrier to entry. They are as follows: general equilibrium analysis, the stability postulate, explicit microfoundations, the intertemporal equilibrium concept, rational expectations, the impulse/propagation approach, stochastic shocks, and empirical verifications. Taking these bifurcations is regarded as a sine qua non for good theoretical practice. Notice that perfect competition, perfect information, the representative agent assumption, monetary aspects, and any specific trade technology assumptions do not belong to this set of standards. The strength of the DSGE program then lies in its subtle combination of rigidity and flexibility. The above standards are constitutive of its identity. For the rest, internal criticism is the rule of the game, the fuel of the development of the program. The big tent analogy must be understood as meaning ‘internal criticism is welcome.’ No assumption is sacred as long as the standards are respected. Some are indeed outrageous – e.g. the representative agent assumption. Their justification is tractability and the view that theory construction must proceed step by step – even if removing outrageous assumptions can take decades. All this is underpinned by the fact that general equilibrium analysis faces constraints that are absent from partial equilibrium analysis."
From:
Michel De Vroey
Université catholique de Louvain January 2019