Cordon of Conformity: Why DSGE Models Are Not the Future of Macroeconomics

The Rebuilding Macroeconomic Theory Project, led by David Vines and Samuel Wills (2020), is an important, albeit long overdue, initiative to rethink a failing mainstream macroeconomics. Professors Wills, who must be congratulated for stepping up the challenge of trying make macroeconomics relevant again, call new multiple-equilibrium diverse (MEADE) paradigm Their idea start with simple models, ideally two-dimensional sketches, that explain mechanisms can cause multiple equilibria. These should then incorporated into larger DSGE models in new, synthesis–to see how fundamental pieces economy fit together, subject it being “properly micro-founded”. This paper argues MEADE bound fail, because maintains model as unifying framework at center macroeconomic analysis. reviews 10 weaknesses inherent which these irreparably useless policy Mainstream put once all, Museum Implausible Economic Models–and learn important lessons from non-DSGE approaches.