Scrap micro-foundations to repair macroeconomics – Steve Keen
Professor says economy should be viewed as a dynamic system
Macroeconomists ought to ditch their reliance on micro-founded models in favour of modelling dynamic systems with credit at their heart, Steve Keen said today (March 8).
Keen, professor of economics at Kingston University, said models such as the dynamic stochastic general equilibrium (DSGE) models widely used at central banks had led economists astray with an unrealistic portrayal of credit.
Keen attributed the attempt to build a macro model on micro-foundations to many economists’ blindness
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe
You are currently unable to print this content. Please contact info@centralbanking.com to find out more.
You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.
Copyright Infopro Digital Limited. All rights reserved.
As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (point 2.4), printing is limited to a single copy.
If you would like to purchase additional rights please email info@centralbanking.com
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. As outlined in our terms and conditions, https://www.infopro-digital.com/terms-and-conditions/subscriptions/ (clause 2.4), an Authorised User may only make one copy of the materials for their own personal use. You must also comply with the restrictions in clause 2.5.
If you would like to purchase additional rights please email info@centralbanking.com
More on Economic modelling
NGFS adds near-term climate scenario to analytical toolkit
New framework looks at economic impact of environmental changes in next five years
IMF cuts forecasts as tariffs add to high uncertainty
World economic outlook sours after Trump tariffs
AI forecasting outperforms traditional methods – study
New approach still only complements existing models but results are promising, say authors
BoE museum showcases virtual reality Phillips machine
VR version of Moniac brings 144kg hydraulic economic model to wider audience
Professional long-run inflation forecasts are flawed – study
Chicago Fed research says projections are bogged down by cognitive distortions and overconfidence
Atlanta Fed’s GDP estimate takes a nosedive
Bank projects more severe contraction in Q1, while analysts point to possible recession
Branching paths: the Czech National Bank’s many modelling options
Three external reviews each recommended a different combination of models. The CNB now faces tough design choices, and must also decide how to upgrade its economic research
AI can solve more complex economic models – BIS paper
Neural networks help economists solve and estimate non-linear heterogeneous agent models