.@BoE_Research Andy Haldane makes case for #CambrianExplosion in #Macroeconomic models – for Dynamic Stochastic General Equilibrium (DSGE) models, the critique was not that they did not forecast #GFC; they could not conceive of endogenous #FinancialCrisis at *any* time! Figure below shows GDP forecasts from 27 forecasters incl #BoE 2007Q4 w actual data at end 2015 pic.twitter.com/g3jk3B1tAl— Satyen Baindur (@Satyen_Baindur) April 13, 2018
Might need separate models for i) near-equilibrium fluctuations w approximately linear dynamics ii) far-from-equilibrium (or multiple equilibria) with order parameters like unemployment/GDP undergoing discontinuous phase transitions & heterogeneous agents to explain endogenous crises like the Global Financial Crisis pic.twitter.com/VFZqnA7DRf— Satyen Baindur (@Satyen_Baindur) April 13, 2018
