Jon Faust
mostly economics
Author: Jon Faust
Source: Manuscript, 2008
Abstract: Large-scale macroeconometric models have for 40 years been workhorses of policy analysis at central banks---this despite the bumpy patch that accompanied their adoption. DSGE models are now replacing the old macroeconometric models. This paper is about avoiding the bumpy patch this time. The paper argues that the new models are on the whole no better, and are in some dimensions worse, than the old models by the standards of the critiques of the 1970s models. The paper argues for a more pragmatic standard and illustrates some tools for enhancing the practical value of the models.
