The Heterogeneous State of Modern Macroeconomics: A Reply to Solow

Varadarajan Chari and Patrick Kehoe

No 13655, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Robert Solow has criticized our 2006 Journal of Economic Perspectives essay describing "Modern Macroeconomics in Practice." Solow eloquently voices the commonly heard complaint that too much macroeconomic work today starts with a model with a single type of agent. We argue that modern macroeconomics may not end too far from where Solow prefers. He is also critical of how modern macroeconomists use data to construct models. Specifically, he seems to think that calibration is the only way that our models encounter data. To the contrary, we argue that modern macroeconomics uses a wide variety of empirical methods and that this big-tent approach has served macroeconomics well. Solow also questions our claim that modern macroeconomics is firmly grounded in economic theory. We disagree and explain why.

JEL-codes: E12 E13 E2 E20 E21 E22 E32 E4 E5 E52 E58 E6 E62 (search for similar items in EconPapers)
Date: 2007-11
New Economics Papers: this item is included in nep-cba, nep-dge, nep-hpe and nep-mac
Note: EFG ME PE
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Citations: View citations in EconPapers (3)

Published as 2008. "Comments: Robert Solow, Murray Wiedenbaum, V. V. Chari, and Patrick J. Kehoe." Journal of Economic Perspectives, 22(1): 243-250. DOI: 10.1257/jep.22.1.243

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Working Paper: The heterogeneous state of modern macroeconomics: a reply to Solow (2007)
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