Even sharp critics of DSGE refuse to reject its general equilibrium foundations

Evidence

This even happens with key critics like Joseph Stiglitz. In a long meditation on the flaws of macroeconomics, he suggests the DSGE was the wrong place to start to formalize macroeconomics, and that even when well-meaning Keynesians tinker with it to address the chorus of complaints, “the improved macro-performance is accompanied by an increased arbitrariness in at least certain specifications … the DSGE models have made the wrong trade-offs, focusing on some complexities which are of less importance than those they ignore”; and yet, in the very same paper, he reveals his own ambivalence, writing, “no one can object to models that approximately model the general equilibrium properties of dynamic economies facing endogenous and exogenous shocks, so on one level DSGE is unobjectionable.” No one, that is, except those who trace the disease to the neoclassical model itself. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 795

Categorization

• XREF: Illustrates the thought collective’s boundary discipline — even internal critics police the line; connects to Mirowski’s core thesis that criticism operates within orthodox limits. — connects to: The DSGE consensus model was a top-down compromise, not an organic agreement — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 785; General equilibrium frameworks can only explain change through outside intervention, not internal dynamics — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 814

Broader Connections

• General equilibrium frameworks can only explain change through outside intervention, not internal dynamics #expands (0.82) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 814