Explainer: What is DSGE Models?

DSGE stands for “dynamic stochastic general equilibrium.”. As Blanchard described in his note “Do DSGE Models Have a Future?” , DSGE Models have three major modeling characteristics. First, the behavior of consumers, firms, and financial intermediaries, when present, is formally derived from microfoundations, i.e. they are normally based on microeconomics … read the whole thing…