DSGE Models

Dynamic Stochastic General Equilibrium (DSGE) models are a type of economic framework used to analyze how economies respond to various changes over time. They incorporate random shocks, like changes in technology or policy, and assume that all agents (consumers, firms, etc.) make decisions based on their expectations about the future. DSGE models help economists understand the interactions between different sectors of the economy and predict the effects of economic policies, making them valuable tools for policymakers in planning and managing economic stability and growth.