Dynamic stochastic general equilibrium (DSGE) models are "seriously flawed" but nevertheless likely to play a major role in the future of macroeconomics if carefully reformed, according to former IMF chief economist Olivier Blanchard.

Blanchard takes issue with the models' "unappealing assumptions", their use of "highly suspicious" calibrations, the difficulty of drawing solid normative conclusions and the communication challenge posed by their complexity.

All the same, sketching his argument in