A Comparative Analysis of the Calibrated DSGE Model and SSA Method Results on the Latvian Economy

Sergejs Hilkevics and Valentina Semakina ()
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Sergejs Hilkevics: Faculty of Economics and Management, Ventspils University of Applied Sciences, LV-3601 Ventspils, Latvia
Valentina Semakina: Faculty of Economics and Management, Ventspils University of Applied Sciences, LV-3601 Ventspils, Latvia

Economies, 2025, vol. 13, issue 4, 1-22

Abstract: This article examines the theoretical foundations of economic forecasting based on DSGE models. DSGE models are the main direction of contemporary macroeconomics theory—the inclusion of the stochastic processes and expectations of economic agents in the analysis of economic processes made them one of the best economic forecasting tools. The methodological basis of this paper is two approaches of economic forecasting theory: technical analysis and fundamental analysis. In this article, we have performed the calibration of the DSGE model with investment adjustment costs for the Latvian economy and compared these results with the statistical data filtered with the SSA method. Key results have shown the ability of both approaches to capture the dynamics of the main Latvian macroeconomic indicators.

Keywords: DSGE models; SSA; economic forecasting; Latvian economy (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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