Beyond the DSGE Straitjacket

Mohammad Pesaran and Ronald Smith

No 3447, CESifo Working Paper Series from CESifo

Abstract: Academic macroeconomics and the research department of central banks have come to be dominated by Dynamic, Stochastic, General Equilibrium (DSGE) models based on micro-foundations of optimising representative agents with rational expectations. We argue that the dominance of this particular sort of DSGE and the resistance of some in the profession to alternatives has become a straitjacket that restricts empirical and theoretical experimentation and inhibits innovation and that the profession should embrace a more flexible approach to macroeconometric modelling. We describe one possible approach.

Keywords: macroeconometric models; DSGE; VARs; long run theory (search for similar items in EconPapers)
JEL-codes: C10 E10 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Related works:
Working Paper: Beyond the DSGE straightjacket (2011)
Working Paper: Beyond the DSGE Straitjacket (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3447

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