One of the most common fallacies in the economics blogosphere — and elsewhere — is what I call “devalue and dismiss.” That is, a writer will come up with some critique of another argument, let us call that argument X, and then dismiss that argument altogether. Afterwards, the thought processes of the dismisser run unencumbered by any consideration of X, which after all is what dismissal means. Sometimes “X” will be a person or a source rather than an argument, of course.
The “devalue” part of this chain may well be justified. But it should lead to “devalue and downgrade,” rather than “devalue and dismiss.”
“Devalue and dismiss” is much easier of course, because there then will be fewer constraints on what one can believe and with what level of certainty. “Devalue and downgrade” keeps a lot of balls in the air and that can be tiresome and also unsatisfying, especially for those of us trained to look for neat, intuitive explanations.
Enter DSGE models. There are plenty of good arguments against them. Still, they provide a useful discipline and they pinpoint rather ruthlessly what it is they we still do not understand. We can and should devalue them in a variety of ways, and for a variety of reasons, but still we should not dismiss them. Better yet than “devalue and downgrade” might be “devalue, downgrade, and…yet…de-dogmatize,” because these models usually point out the limits of our understanding. Those models defeat us, and thus it is odd when we attempt to portray the situation as us defeating them.
Note that very smart people are often good at “devalue and dismiss” because they can come up with a lot of good reasons to devalue the arguments or frameworks of others. But still they should not leap so quickly to the “dismiss.”
I would mention that Alex, while he did criticize DSGE models yesterday, also appreciates their uses.
Addendum: Here is Chris House, defending DSGE models.