Macroeconomics after the crisis
Subtitle: time to deal with the pretense-of-knowledge syndrome
By: Ricardo J. Caballero
Contributors: National Bureau of Economic Research
Series: NBER working paper series -- working paper 16429; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16429.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "In this paper I argue that the current core of macroeconomics-by which I mainly mean the so-called dynamic stochastic general equilibrium approach-has become so mesmerized with its own internal logic that it has begun to confuse the precision it has achieved about its own world with the precision that it has about the real one.  This is dangerous for both methodological and policy reasons.  On the methodology front, macroeconomic research has been in "fine-tuning" mode within the local-maximum of the dynamic stochastic general equilibrium world, when we should be in "broad-exploration" mode.  We are too far from absolute truth to be so specialized and to make the kind of confident quantitative claims that often emerge from the core.  On the policy front, this confused precision creates the illusion that a minor adjustment in the standard policy framework will prevent future crises, and by doing so it leaves us overly exposed to the new and unexpected"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 2/22/2011.

Includes bibliographical references.

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