Sustaining the Cowles-Commission Approach to macroeconomic modelling: analytical coherence, unavoidable detail, and the Ray Fair model of the US economy

David Vines

No 22006, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Before DSGE models existed there were large-scale macroeconometric models in the Cowles Commission tradition. In his most recent book Ray Fair provides a clear description of his own model of this kind, a model of the US economy. His exposition provides a compelling defence of this tradition, showing why it is essential that this tradition be sustained. It also contains a hard-hitting critique of DSGE modelling practice. In this short paper I restate Fair’s defence and clarify his criticisms. I show that the issues which he raises go well beyond the details of his own particular model. I use my discussion to articulate the trade-off, which all macroeconomic modellers must face, between analytical coherence and unavoidable detail.

Keywords: Macroeconomic models; Cowles Commission; US Economy; Dsge models (search for similar items in EconPapers)
JEL-codes: E10 E17 E31 E61 (search for similar items in EconPapers)
Date: 2026-10
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