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Title:DSGE Models and Central Banks PDF Logo
Authors:Tovar, Camilo Ernesto
Issue Date:2009
Citation:[Journal:] Economics: The Open-Access, Open-Assessment E-Journal [Volume:] 3 [Issue:] 2009-16 [Pages:] 1-31 [DOI/URN:] doi:10.5018/economics-ejournal.ja.2009-16
Series/Report no.:economics - The Open-Access, Open-Assessment E-Journal 2009-16
Abstract:Over the past 15 years there has been remarkable progress in the specification and estimation of dynamic stochastic general equilibrium (DSGE) models. Central banks in developed and emerging market economies have become increasingly interested in their usefulness for policy analysis and forecasting. This paper reviews some issues and challenges surrounding the use of these models at central banks. It recognises that they offer coherent frameworks for structuring policy discussions. Nonetheless, they are not ready to accomplish all that is being asked of them. First, they still need to incorporate relevant transmission mechanisms or sectors of the economy; second, issues remain on how to empirically validate them; and finally, challenges remain on how to effectively communicate their features and implications to policy makers and to the public. Overall, at their current stage DSGE models have important limitations. How much of a problem this is will depend on their specific use at central banks.
Subjects:DSGE models
central banks
communication m
estimation
modelling
JEL:B4
C5
E0
E32
E37
E50
E52
E58
F37
F41
F47
Persistent Identifier of the first edition:doi:10.5018/economics-ejournal.ja.2009-16
URL of the first edition:http://www.economics-ejournal.org/economics/journalarticles/2009-16
Creative Commons License:http://creativecommons.org/licenses/by-nc/2.0/de/deed.en
Document Type:Article
Appears in Collections:Economics: The Open-Access, Open-Assessment E-Journal - Journal Articles

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