Arbeitspapier

DSGE Models and Central Banks

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.

Language: Englisch

Bibliographic citation: Series: Economics Discussion Papers ; No. 2008-30

Classification: Wirtschaft
International Finance Forecasting and Simulation: Models and Applications
Central Banks and Their Policies
Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation: Models and Applications
Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications
Open Economy Macroeconomics
Monetary Policy
Business Fluctuations; Cycles
Monetary Policy, Central Banking, and the Supply of Money and Credit: General

Subject: DSGE models
Central Banks
Communication
Estimation
Modelling
Dynamic Stochastic General Equilibrium Model
CGE-Modelling
Geldpolitik
Transmissionsmechanismus
Schätztheorie
Theorie

Event: Geistige Schöpfung

(who): Tovar, Camilo Ernesto

Event: Veröffentlichung

(who): Kiel Institute for the World Economy (IfW)

(where): Kiel

(when): 2008

Handle: http://hdl.handle.net/10419/27466

Last update: 10.03.2025, 11:46 AM CET

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Object type

Arbeitspapier

Associated

Tovar, Camilo Ernesto
Kiel Institute for the World Economy (IfW)

Time of origin

2008

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