The nature of DSGE macroeconomics

Contemporary macroeconomic theory is dominated by one type of modelling— dynamic stochastic general equilibrium (DSGE) modelling. The widespread acceptance of this type of model as a satisfactory explanatory account of the macroeconomy, despite a decade or more of apparently very strong counter evidence, demands explanation. Moreover, the sharp differences between such macro models and macro models in natural science raise important questions about its relationship to macroeconomic data. The demand for and the nature of so-called microfoundations in DSGE macroeconomic models is also startlingly different from the role of microfoundations for macro models in natural sciences. Altogether the methodologically anomalous character of DSGE macroeconomics calls for an analysis that distinguishes its cognitive status from macro models elsewhere in science. This chapter attempts to provide one.