Beyond the DSGE straightjacket
Pesaran, M. H.
Smith, R. P.
Cambridge Working Papers in Economics
Faculty of Economics
MetadataShow full item record
Pesaran, M. H., & Smith, R. P. (2011). Beyond the DSGE straightjacket. https://doi.org/10.17863/CAM.1170
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.
This record's DOI: https://doi.org/10.17863/CAM.1170
This record's URL: https://www.repository.cam.ac.uk/handle/1810/257242
All Rights Reserved
Licence URL: https://www.rioxx.net/licenses/all-rights-reserved/