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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/46410
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| Title: | | Beyond the DSGE straitjacket  |
| Authors: | | Pesaran, Mohammad Hashem Smith, Ron P. |
| Issue Date: | | 2011 |
| Series/Report no.: | | CESifo working paper: Empirical and Theoretical Methods 3447 |
| Abstract: | | Academic macroeconomics and the research department of central banks have come to be dominated by Dynamic, Stochastic, General Equilibrium (DSGE) models based on microfoundations 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. |
| Subjects: | | macroeconometric models DSGE VARs long run theory |
| JEL: | | I20 D72 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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