Dynamic Stochastic General Equilibrium Analysis:   The Ethiopian Economy in Focus

Feto, Adem

dc.contributor.author	Feto, Adem
dc.date.accessioned	2022-12-07T12:16:17Z
dc.date.available	2022-12-07T12:16:17Z
dc.date.issued	2022-11
dc.identifier.uri	http://ir.bdu.edu.et/handle/123456789/14692
dc.description.abstract	In the 1990s, the competition between Keynesian and Classical ideas on macroeconomics ended with the 'the new neoclassical synthesis' which combines characteristics from both sides. The synthesis led to the Dynamic Stochastic General Equilibrium (DSGE) models, which is widely regarded as a powerful instrument for analyzing policy, forecasting and governing Central Banks (CB). Yet, several contends that it is tempting to view the arrival of ‘the new neoclassical synthesis’ as a significant advancement. Discussion has been made on the evolution, value additions, advantages and downsides of macroeconometric–general equilibrium models and estimation methods. Criticisms of DSGE models are as old as the model itself, but there has been continuous enrichment of the modeling. Despite the setbacks, the model could meet a macroeconomic need by suggesting a core structure around which to build and organize discussion. The purpose of this study is to make a critical assessment of applicability and developments in DSGE modeling. A sample of 168 studies was considered for the analysis. More than 90 percent of the DSGE studies were conducted after the great recession of 2008/09. In developing countries, DSGE research is inadequate, for which a shortage of skills, awareness and importantly the debates of its applicability in developing countries may be responsible factors. DSGE properties such as microeconomic foundations, its dynamic and stochastic nature, and its uses in CBs made it increasingly popular. Its computational power and adaptability to a multitude of problems inspired 60 percent of studies to apply Bayesian techniques of estimation. Although DSGE has limitations in terms of accomplishments and applications, it continues to evolve its methodology and to be used by CBs. Based on its current state of development, the coexistence of DSGE with other policy analysis and forecasting models is recommended for improved policy decision making.	en_US
dc.language.iso	en	en_US
dc.subject	ECONOMICS	en_US
dc.title	Dynamic Stochastic General Equilibrium Analysis: The Ethiopian Economy in Focus	en_US
dc.type	Thesis	en_US