A micro-founded IS-LM model

Traditional Keynesian models, like the IS-LM one, were discarded as they lack micro-foundations. They were also subject to the Lucas critique (in the sense that one cannot properly estimate a macroeconomic model if the parameters respond to changes in monetary/fiscal policy).

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Predicting a crisis: a DSGE perspective

The last global recession raised concerns about the ability of macroeconomists to predict crises of such magnitude. Certainly, the forecasting is not the main focus of macroeconomics. I would say that, at least nowadays, it is of rather marginal interest to academic macroeconomists. A proof in this sense is provided by the very low number of publications related to macroeconomic forecasting.

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Was the Financial and Economic Crisis Predictable?

The economic science came under fire during the last financial and economic crisis for many reasons. One thing that came frequently under attention was the supposedly inability of economists to predict the crisis. Well, it seems that the crisis was predicted to a certain extent by some economists, at least that’s what the paper by Bezemer shows.

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