DSGE Modeling

DSGE (Dynamic Stochastic General Equilibrium) modeling is a method economists use to understand how an economy evolves over time. It combines economic theories with data to simulate how households, businesses, and the government make decisions under uncertainty and changing conditions. By capturing the intricate interactions among these agents, DSGE models help analyze the impact of policies, shocks, and trends on variables like employment, inflation, and growth, providing a comprehensive framework for forecasting and policy evaluation.