Collection of puzzles in macroeconomics or infamous failures of contemporaneous macro-models
The idea behind this repo is to collect puzzling evidence and open questions concering macroeconomic research. Likewise it aims to be a compilation of the contradictions between economic theory and the empirical evidence. Hopefully it will help us all (and motivated junior researchers) to focus on the importan questions and the big picture, and not to get lost in (technical) details.
This list is tought to be constructive and not intended to be a one-sided critique on macroeconomics/DSGE models/rational Expectations as a whole. Please try to be concise and neutral. Put details like literature or links in the Wiki, that is part of this repo.
- The Phillips Curve is flat (and potentially doesn't exist)
- Intertemporal substitution is a too simplistic view on the monetary transmission mechanism
- Survey evidence contradicts the rational expectations hypothesis
- Price puzzle (in many studies, the Fed Fund rate is positively correlated with inflation)
- raised by Bernanke and Blinder 1992, AER
- Equity premium puzzle (Macro models require an implausibly high degree of risk aversion to explain the premium of stocks over "safe" bonds)
- raised by Mehra and Prescott 1985, JME
- Bond premium puzzle (Macro models cannot explain the large and variable premium on long-term vs short-term bonds)
- raised by Rudebush and Swanson 2008, JME
- Shimer puzzle (basic search-and-matching models cannot explain the volatility in unemployment given the observed volatilty in labor productivity)
- raised by Shimer 2005, AER
- Forward Guidance Puzzle (standard DSGE models tend to grossly overestimate the impact of Forward Guidance on the macroeconomy)
- raised by Del Negro and Giannoni and Patterson 2015, FED NY Working Paper