DSGE Forecasting

DSGE (Dynamic Stochastic General Equilibrium) forecasting is an economic method that uses complex models to predict future economic conditions. It combines economic theory, data, and assumptions about how people and firms behave over time, considering randomness and shocks. By solving these models, economists generate forecasts for variables like growth, inflation, and unemployment. This approach helps policymakers and analysts understand potential future trends, assess the impact of policies, and make informed decisions, all grounded in a structured, theory-based framework that captures the interactions within an economy.