In other words, DSGE models (not just “Freshwater” models, I mean the whole kit & caboodle) have failed a key test of usefulness. Their main selling point – satisfying the Lucas critique – should make them very valuable to industry. But industry shuns them.
Pointer from Mark Thoma.
A few years ago, I happened to run into Olivier Blanchard. I offered my complaint that folks like Stan Fischer and himself had made macroeconomics narrow and stilted. “We’ve passed the market test,” he replied. But the “market test” to which he referred is limited to academic macro. It is a supplier-controlled cartel, not a consumer market.