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The State of DSGE Modelling

Levine, Paul (2019) The State of DSGE Modelling In: Oxford Research Encyclopedia of Economics and Finance. Oxford Research Encyclopedias . Oxford University Press (OUP).

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This survey and assessment of the state of DSGE modelling is structured around six key criticisms levelled at the approach. The first is fundamental and common to macroeconomics and microeconomics alike - namely, problems with rationality and Expected Utility Maximization (EUM). The second is that DSGE models examine fluctuations about an exogenous balanced growth path and there is no role for endogenous growth. The third consists of a number of concerns associated with estimation. The fourth is another fundamental problem with any micro-founded macro-model - that of heterogeneity and aggregation. The fifth and sixth concerns focus on the rudimentary nature of earlier models that lacked unemployment and a banking sector.

Item Type: Book Section
Divisions : Faculty of Arts and Social Sciences > School of Economics
Authors :
Date : 2019
Copyright Disclaimer : © Oxford University Press USA, 2019. All Rights Reserved. Personal use only; commercial use is strictly prohibited (for details see Privacy Policy and Legal Notice).
Uncontrolled Keywords : DSGE modelling; Rationality; Endogenous growth; Systems estimation; Heterogeneity; Unemployment; Banking sector
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Depositing User : Clive Harris
Date Deposited : 01 Nov 2019 10:27
Last Modified : 01 Nov 2019 10:27

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