What is a conceptual framework?

My first instinct after reading Campbell’s blog post “Conceptual Frameworks: some thoughts” was to try to define the conceptual framework of Econ488. I found this was tricky because Campbell explicitly separated the idea of having “conceptual framework” from having “a set of standards, or learning outcomes … or prescriptive enumeration of skills.” (It might just be me but) the lack of clarity on how conceptual frameworks are distinct from these skills was my biggest frustration with the post, because I think my initial understanding of the conceptual framework for this class was that we would explore certain themes – i.e. whether the economy rests at (or eventually comes to) an equilibrium, whether contemporary macroeconomics can adequately explain crises, whether macroeconomics can rest on micro-foundations or is something intrinsically distinct – all of which could easily fall into the categories latter, more trivial categories. Despite my uncertainty regarding whether exploration of these themes constitute a conceptual framework, they remain my most satisfying definition of the conceptual framework for this class.

I then tried to go more general – is the class trying to teach us how to be better oral/written communicators of macroeconomic ideas? Or is Econ488 intended simply to introduce us to the dilemmas facing contemporary macroeconomists? My problem with these definitions is that they seem far too general. Most economics classes serve these purposes, if only at a different level than our seminar. After all, the Principles of Macro/Micro classes teach students how to use simplified models that form the basis of the models we’re currently learning in our seminar. Would it be more useful to speak in terms of a conceptual framework for the economics major?

Also, I enjoyed the shout-out to Bryan Alexander, bamboozler of Fsems everywhere.

Do DSGE models have a future?

Oliver Blanchard of the Peterson Institute for International Economics had an interesting hot take on the future of DSGE models. In essence, his argument was that while DSGE models have a number of unappealing features (they’re based on shaky assumptions, estimation as a system makes it difficult to pinpoint flaws in the models, they don’t provide sufficient analysis of distributional effects for contemporary economic problems, and they are bad at communicating results to a lay audience), DSGE models are ultimately redeemable. As such, Dr. Blanchard lays out two proposals to revitalize the use of DSGE models: (1) DSGE models need to incorporate the work of other sub-disciplines (such as behavioral economics, big data, etc.) instead of relying simply on micro-foundations and (2) DSGE models are not a one-size-fits-all tool and economists must recognize their limitations.

While I agree with many of Dr. Blanchard’s diagnoses, I am not so sure about his proposed solutions. Moving away from exclusive reliance on micro-foundations certainly sounds desirable in theory, but it seems to me that adding the work of other disciplines would increase, rather than decrease, the complexity of DSGE models which would (1) make it more difficult to solve these models equation-by-equation and (2) raise the barriers to entry for understanding the assumptions of any given DSGE model.