Dynamic stochastic general equilibrium (DSGE)
Bank of Canada maps path to ‘fourth-generation’ models
Officials plan to create new workhorse model backed by variants focusing on key topics
Joseph Stiglitz on the challenge of fixing macroeconomics
The Nobel Prize-winning economist discusses the flaws in mainstream models and how to repair them, whether central banks went wrong in 2021, and what to do – or not to do – about inflation
Book notes: Cogs and monsters, by Diane Coyle
Coyle brings much-needed nuance to the debate over the shortcomings of economics
Lifetime achievement: Stanley Fischer
Fischer has had a profound impact on monetary economics and central banking during his prolific career
Reciprocity can curb macro-prudential ‘leakages’ – BIS paper
But gains can be small, which may explain limited use of reciprocity to date, authors say
Economics Benchmarks 2021 report – making sense of the modern economy
Covid-19 coloured central banks’ views on the governance of their economics function in the past year, from research topics to forecasting, data, publications and more
Advanced economies draw on wider range of models
DSGE models and newer techniques more common at advanced economy central banks
Nearly 40% of central banks have financial sector in main forecast model
Semi-structural models remain favoured option for producing key forecasts
Mervyn King attacks central bank theories of inflation
Expectations are “too fragile” to serve as an anchor for inflation, former BoE governor says
New York Fed opens new research centre
Marco Del Negro will lead work on research methods and issues in macroeconomics
BIS paper outlines model of managed floats
Framework captures financial frictions while being simpler than other models, authors say
Economists win prize for agent-based forecast model
Authors say theirs is the first agent-based model to produce competitive economic forecasts
Financial sector still a headache for central bank modellers
Macro-financial links are difficult to integrate into key models, with progress since the global financial crisis slow. But some central banks are making breakthroughs
Central banks look to shockproof models in wake of Covid-19
The Covid-19 crisis caused many central bank models to break down. Economists at the St Louis Fed, Bank of Spain and ECB were quick to innovate and say they will continue testing new tools
BoE paper explores macroeconomic impact of macro-pru
Authors build DSGE model featuring “detailed banking sector” and sticky interest rates
Economics Benchmarks 2020 report – executive summary
Shedding light on economics governance, salaries, forecasting, research, publications and more
Agent-based models remain rare among economics departments
Economics Benchmarks 2020 highlights the varied applications of different model types at central banks
Semi-structural models are the forecast weapon of choice
Flexible modelling approach comes out on top; around half of central banks include a financial sector
Economists race to merge epidemiology and macro
Promising results are emerging, but workable forecasts may be some way off
BIS paper finds little evidence of ‘liquidity trap’
Monetary policy remains effective even very close to the lower bound, economists find
Paper models monetary policy in a ‘Hank’ framework
Authors combine micro and macro “moments”, finding investment is “crucial” to policy transmission