Recent Developments in Macroeconomics: The DSGE Approach to Business Cycle in Perspective

John Davis and Wade Hands (eds.), "The Elgar Companion to Recent Economic Methodology," pp. 375-403

Posted: 27 Jan 2011 Last revised: 4 Feb 2017

See all articles by Pedro Garcia Duarte

Pedro Garcia Duarte

University of São Paulo (FEA-USP) - Department of Economics

Date Written: December 6, 2010

Abstract

I survey the so-called "new neoclassical synthesis" literature (that emerged allegedly as a synthesis between the real business cycle and the new Keynesian literatures) and its ubiquitous dynamic stochastic general equilibrium (DGSE) model, emphasizing the current practices in it. This includes presenting a toy model and showing what kind of dynamics among aggregate variables it produces, and the reverse-engineering strategy that mainstream macroeconomists use to enrich the dynamics of their models. I finally ponder such current practices and the criticisms brought by the recent crisis, venturing to explore future prospects.

Keywords: New Neoclassical Synthesis, DSGE Models, Monetary Economics, Microfoundations

JEL Classification: E40, E32, B22, B41

Suggested Citation

Garcia Duarte, Pedro, Recent Developments in Macroeconomics: The DSGE Approach to Business Cycle in Perspective (December 6, 2010). John Davis and Wade Hands (eds.), "The Elgar Companion to Recent Economic Methodology," pp. 375-403. Available at SSRN: https://ssrn.com/abstract=1748616 or http://dx.doi.org/10.2139/ssrn.1748616

Pedro Garcia Duarte (Contact Author)

University of São Paulo (FEA-USP) - Department of Economics ( email )

Av. Prof. Luciano Gualberto, 908
Departamento de Economia
Sao Paulo, SP, 05508-010
Brazil

HOME PAGE: http://www.usp.br/feaecon/perfil.php?u=110

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