Mapping types of macromodel to types of macro user

Abstract

Abstract This paper expands on a list of different types of macroeconomic model proposed by Olivier Blanchard. The paper distinguishes between models that range between simple and complex, and between models that range in their focus between data consistency and theoretical consistency. While model users in the private sector and the public sector use a range of different types of model, academics confine themselves largely to models that are internally consistent in terms of their theory. The paper argues that the use of a wider range of models outside academia can no longer be explained by the novelty of DSGE models, and instead reflects some intrinsic advantages of other types of model. Finally the paper considers whether this difference in model use between sectors is beneficial.