The blogosphere is more likely to criticize DSGE models, whereas the profession is more likely to see such models of as providing discipline for any business cycle explanation, Keynesian included.
…On all of these questions my views are closer to those of the specialists in the economics profession.
I count myself as strongly opposed to DSGE models. In my view, macroeconomic models are much more speculative and metaphorical than microeconomic models. Take supply and demand. In microeconomics, I believe that when you draw a supply and demand diagram, you are providing an interesting theoretical description that has empirical use. But “aggregate supply and demand” does neither.
DSGE constrains macroeconomic models to describe a “representative agent” undertaking “dynamic optimization.” This constraint does not make macro models any less speculative or metaphorical. The advocates of DSGE implicitly claim that a certain mathematical approach is both necessary and sufficient to make macro models rigorous. I view that claim as a baloney sandwich.
I wonder why you strongly disagreed with Tyler and still gave him your “favorite blogger” tag. 😉
The reason these models are popular is because these economists don’t really understand how silly it is to suggest that such math can model the economy, either because they are ignorant of how the math really works or how the economy really works or both. The death of the university in the coming years will sweep all these “specialists” out into the streets and force them to get real jobs, sparing us all this pseudo-scientific nonsense.