If some of you closet DSGE-haters at central banks would help out scholars who are trying different approaches career-wise, maybe macroeconomics might see some progress.
DSGE in the Private Sector
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Another economist at central bank. This is spot on. We presented our workhorse model at many different conferences, but if people only knew exactly how the models are used, they would lose their faith in humanity.
Economist at central bank.
My own complaints about the DSGE method are based in hard experience. Our monetary policy committee hasn't had much confidence in the output of our in-house DSGE projection model for a long time. The amount of ad-hoc judgment and auxiliary modelling needed to make it usable at all would curl the public's hair if they knew the details. We don't even try to use it to model things like house prices or household debt, just for example. DSGE models have never been good at modelling asset prices or balance sheet variables. -
well to be fair this is one the areas in which academic economists have done the most progress in recent years
Another economist at central bank. This is spot on. We presented our workhorse model at many different conferences, but if people only knew exactly how the models are used, they would lose their faith in humanity.
Economist at central bank.
My own complaints about the DSGE method are based in hard experience. Our monetary policy committee hasn't had much confidence in the output of our in-house DSGE projection model for a long time. The amount of ad-hoc judgment and auxiliary modelling needed to make it usable at all would curl the public's hair if they knew the details. We don't even try to use it to model things like house prices or household debt, just for example. DSGE models have never been good at modelling asset prices or balance sheet variables.