DSGE and efficient markets theory both ignored all evidence and criticism that challenged them

Evidence

Instead of drawing the conclusion that the marriage of micro and macro was doomed, and the DSGE a stillbirth, the profession had chosen to pledge its troth to an outré mutant case and call it the whole world. It would be as though a religious fanatic arranged to live in a hermetic world composed only of Christian Scientist cyborgs, so that he need never encounter anyone who might call his faith in natural healing into question. As Kirman wrote, “both the development of the DSGE model and the efficient markets hypothesis share a common feature—despite the empirical evidence and despite their theoretical weaknesses, their development proceeded as if the criticism did not exist.” But isn’t that the very definition of a self-confident orthodoxy? — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 798

Categorization

• XREF: Kirman’s observation about proceeding ‘as if the criticism did not exist’ matches the resilience-of-neoliberalism thesis Mirowski develops across the whole book — the thought collective’s immunity to refutation. — connects to: The efficient-markets hypothesis erased discussion of bubbles and speculation — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 749

Broader Connections

• The efficient-markets hypothesis erased discussion of bubbles and speculation #exemplifies (0.75) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 749