Dynamic stochastic general equilibrium (DSGE)
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
Macroeconomics is not broken
The discipline has moved beyond the neoclassical synthesis. Critics should too
Inside the ECB’s upgraded multi-country model
ECB-Base sets the blueprint for a new semi-structural workhorse model of the eurozone
30 years of forecasting: have central banks learned anything?
Forecasting models are constantly being upgraded, but forecast errors are still persistent. What more can central banks do?
RBA sheds light on new ‘Martin’ macro model
Large-scale “macroeconometric” model designed to balance flexibility and theoretical rigour
Proposal to axe Phillips curve triggers controversy
“One cannot just ignore an equation,” retorts Olivier Blanchard
NBER paper outlines ‘four-equation model’
Authors expand the textbook three-equation model to account for unconventional monetary policy; extra policy tool is necessary to overcome credit shocks
BIS says theory behind EME policy must catch up with ‘reality’
Situation is similar to the adoption of inflation targeting in the early 1990s, says BIS annual report
‘Uncertainty shocks’ can do long-term harm – BoE paper
Authors outline a general equilibrium model to show uncertainty can have long-run effects
Informal sector changes inflation dynamics – BIS paper
Informality dampens impact of some shocks but also impairs policy transmission, authors find
Book notes: Finance and philosophy, by Alex J Pollock
A readable and useful book that provides much food for thought, and should be read widely by economists and policy-makers
Book notes: Where economics went wrong, by David Colander and Craig Freedman
Chicago economics’ gladiatorial debating style has cost the discipline dearly, the authors argue