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    Beyond the DSGE straitjacket

    Pesaran, M.H. and Smith, Ron P. (2011) Beyond the DSGE straitjacket. Working Paper. CESifo Group, Munich, Germany.

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    Abstract

    Academic macroeconomics and the research department of central banks have come to be dominated by Dynamic, Stochastic, General Equilibrium (DSGE) models based on micro-foundations of optimising representative agents with rational expectations. We argue that the dominance of this particular sort of DSGE and the resistance of some in the profession to alternatives has become a straitjacket that restricts empirical and theoretical experimentation and inhibits innovation and that the profession should embrace a more flexible approach to macroeconometric modelling. We describe one possible approach.

    Metadata

    Item Type: Monograph (Working Paper)
    Additional Information: CESifo Working Paper Series 3447
    Keyword(s) / Subject(s): macroeconometric models, DSGE, VARs, long run theory
    School: Birkbeck Schools and Departments > School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Research Centre: Applied Macroeconomics, Birkbeck Centre for
    Depositing User: Sarah Hall
    Date Deposited: 12 May 2014 12:29
    Last Modified: 07 Dec 2016 09:11
    URI: http://eprints.bbk.ac.uk/id/eprint/9704

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