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Are DSGE models irreparably flawed?

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  • Michał Brzoza-Brzezina

    (Narodowy Bank Polski)

  • Jacek Suda

    (Narodowy Bank Polski)

Abstract

In this paper we respond to the recent critique of Dynamic Stochastic General Equilibrium (DSGE) models. We present the most recent developments in the DSGE literature and show that it has gone a long way to accommodate many sources of criticism.

Suggested Citation

  • Michał Brzoza-Brzezina & Jacek Suda, 2021. "Are DSGE models irreparably flawed?," Bank i Kredyt, Narodowy Bank Polski, vol. 52(3), pages 227-252.
    • Handle: RePEc:nbp:nbpbik:v:52:y:2021:i:3:p:227-252
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    More about this item

    Keywords

    DSGE models; microfoundations; heterogeneity; bounded rationality; financial frictions;
    All these keywords.

    JEL classification:

    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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