Critics of DSGE models argue that despite their complexity and sophistication, they failed to provide indications of

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Critics of DSGE models argue that despite their complexity and sophistication, they failed to provide indications of the shock that was the Financial Crisis. Apart from the lack of a financial markets element built into the models, critics also claim that the neo-classical foundations and assumptions upon which the models are constructed are fundamentally flawed. Why do you think these critics level such accusations against these models, and to what extent do you agree with their reservations of the value of these models in helping forecasting and policymaking?

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Economics

ISBN: 9781473768543

5th Edition

Authors: Gregory Mankiw, Mark P. Taylor

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