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New Macroeconomics by Apek Mulay

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CHAPTER 8

Summation

If there was any doubt about the need for new macroeconomics, it has been removed convincingly by two articles published in September 2017. Ten years after the start of the Great Recession, Professor Stiglitz wrote a paper wondering “Where Modern Macroeconomics Went Wrong.” He laid the blame on the use of extremely complex theories using extremely complex titles such as dynamic stochastic general equilibrium (DSGE) models that have found favor with economists today. These models have a lot of elegant math or econometrics, but very little in terms of new ideas. If Adam Smith were alive today, he would have a hard time understanding these models.

Two other economists, Eshe Nelso and Dan Kopf, commented on the Stiglitz paper ...

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