Why Does No-One Teach Undergraduate Macroeconomics Using The Dynamic Stochastic General Equilibrium Model?
This paper argues that the reason that the DSGE model, which has proved so successful in convincing academic economists of its value, has made relatively few inroads into the undergraduate teaching sphere is that it fails to allow for the development of higher order educational objectives in students. The qualities which make it attractive to academics, such as the purity of its assumptions and its sound microeconomic basis, have little resonance with undergraduate students. Instead, the qualities of the neo-Keynesian model, such as its ability to incorporate ‘real-world’ institutional features and the ease with which it can be used to develop higher order skills and applications, prove much more attractive.
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