How complicated does the model have to be?

Simple macroeconomic models based on IS-LM have become unfashionable becaus e of their lack of micro-foundations, and are in danger of being effectivel y forgotten by the profession. Yet while thinking about micro-foundations i s a productive enterprise, complex models based on such foundations are not necessarily more accurate than simple, ad-hoc models. Three decades of att empts to base aggregate supply on rational behaviour have not displaced the Phillips curve, inter-temporal models of consumption do not offer reliable predictions about aggregate demand Meanwhile, the ease of use of small mod els makes them superior for many practical applications. So we should not a llow them to be driven out of circulation.