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Contrasting Visions for Macroeconomic Theory: DSGE and OEE

Abigail N. Devereaux and Richard E. Wagner

The American Economist, 2020, vol. 65, issue 1, 28-50

Abstract: Dynamic stochastic general equilibrium (DSGE) modeling remains the workhorse of contemporary macroeconomics despite a growing number of critiques of its ability to explain the aggregate properties of an economic system. For the most part, those critiques accept the DSGE presumption that traditional macro data are primitive, causal data. This leads to a stipulative style of analysis where macro variables are explained in terms of one another. In contrast, we set forth an open-ended evolutionary (OEE) framework for an OEE macroeconomics. Within this framework, systems data are not primitive, but are derived from prior microlevel interactions without any presumption that those macrolevel derivations reflect systemic equilibrium among the microlevel primitive sources of action. We explore some contours of an OEE framework by placing coordination games within an ecological setting where there is no agent who has universal knowledge relevant to that ecology of games. JEL Classifications : B40, C73, D51, D85, E02

Keywords: systems theory; macroeconomics; open-ended evolution; DSGE modeling; macroeconomics; ecological game theory (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:sae:amerec:v:65:y:2020:i:1:p:28-50

DOI: 10.1177/0569434518810506

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