Studies have shown that the forecasts from dynamic stochastic general equilibrium models perform better than central banks' judgemental forecasts as well as forecasts based on statistical analysis but without a theoretical foundation. This column shows that performing better is hardly good performance given how badly all three forecasts compare with reality.
The unfortunate uselessness of most state-of-the-art academic monetary economics
- Steve Williamson proves our Universe is non-causal
- Dynamic Stochastic General Equilibrium Models in Macroeconomics (DSGEs)