Trends of Macroeconomic Models

Abstract

This article provides an overview and analysis of the ideas of the leading macroeconomists expressed in the issue “Rebuilding Macroeconomic Theory”, Oxford Review of Economic Policy journal. These ideas were expressed in connection with the discussion of the future of macroeconomic models. The motivation for the discussion lies in the poor performance of macroeconomic models before the global economic crisis of 2007–2008 and in the subsequent period of recovery. The main issue considered by economists is the possible changes in the basic neoKeynesian model and DSGE-models as a whole. It was found that there are three directions for the solution of the issue. First, the rejection of the primary role of DSGE-models in the analysis of modern macroeconomics and the use of other types of models. Secondly, the elimination of defciencies of existing models associated with poor justifcation at the micro level, as well as an unsatisfactory description of fnancial frictions. Thirdly, it is possible not to make any targeted efforts, since the class of DSGE-models is still the most efcient. The paper concludes that the second path of development is more preferable.

Keywords

• macroeconomic models
• neo-keynesian model
• financial crisis
• dsge-models
• rational expectations
• structural models
• financial friction
• micro foundations