Lunchtime Must-Read: Mark Thoma: On Paul Krugman’s: ‘John and Maynard’s Excellent Adventure’
Ah. But, Mark, what real-world questions were DSGE models built to answer? I cannot think of any…
…IS-LM models were built to answer exactly the kinds of questions we encountered during the Great Recession and… provided good answers…. DSGE models were built to address other issues, and it’s not surprising they didn’t do very well when they were pushed to address questions they weren’t designed to answer…