TY  - RPRT
        AU  - Pesaran, M. Hashem
AU  - Smith, Ron P.
        TI  - Beyond the DSGE Straitjacket
        PY  - 2011/Apr/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 5661
        UR  - https://www.iza.org/publications/dp5661
        AB  - 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.
        KW  - VARs
KW  - DSGE
KW  - macroeconometric models
KW  - long run theory
        ER  -