Steve Keen

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Reality Bites: Is the Era of Assumptions Coming to an End for Economists?

DSGE, IS/LM, OLG. If you are a follower of the dismal science, or have come across any news regarding economic modelling, these terms will be somewhat familiar to you. To the rest, they’re just acronyms.

Economics modelling is a funny thing. Instead of actually having specific laws, an all-encompassing model, or a grand unified theory, it has models which need to describe their specific purpose and characteristics through complicated names (and even weirder acronyms). Although not a natural science, economics could gain much by learning how scientists model the natural world.