Dynamic stochastic general equilibrium (DSGE) models are in wide use yet have come under sharp criticism, given their complex nature and the assumptions they rely on. However, many central banks use them in policy analysis. Is this a misguided use of economists’ and policy makers’ time? This eBook reviews the use of DSGE models in policy institutions, the lessons learned, and the desirable ways forward.
Introduction: Are DSGE models useful for policymakers? Refet S. Gürkaynak and Cédric Tille
Section I: How do DSGE models fit in the toolbox?
DSGE models: A cup half full John C. Williams
Bridging the gap between structural VAR and DSGE modelsKatrin Assenmacher
DSGE models in monetary policy committeesStefan Gerlach
Section II: Lessons from DSGE use in policy analysis
Using dynamic stochastic general equilibrium models at the New York FedMarco Del Negro and Marc Giannoni
Empirical DSGE Models: from the Great Moderation, to the Great Recession and beyondAlejandro Justiniano, Giorgio Primiceri, Andrea Tambalotti
Policy packages: Challenge and opportunity for DSGE researchFabio Ghironi
DSGE models and counterfactual analysisGünter Coenen, Roberto Motto, Massimo Rostagno, Sebastian Schmidt and Frank Smets
Section III: What next?
Some scattered thoughts on DSGE