Yet, there are signs that, at least financial markets, are inclined to shrug
the crisis off and to assume that we will be back on track again rather
soon. There are several points worth making about this. First, before
macroeconomists were faced with the crisis there was a general consensus
that we now understood the fundamental mechanisms of macroeconomics
and that models such as the Dynamic Stochastic General
Equilibrium (DGSE) model were a good representation of the macroeconomy.
This model is an applied general equilibrium model that is
considered as more scientific than earlier models since it is based on microeconomic
foundations. I will come back to this later, but suffice it to say