DSGE
Business & Finance abbreviation · Economics
| Stands for | Dynamic stochastic general equilibrium |
|---|---|
| Categories | Business & Finance |
DSGE stands for Dynamic stochastic general equilibrium, an economics abbreviation.
Class of macroeconomic models built from the optimizing behavior of households and firms and hit by random shocks, used by central banks and researchers to forecast and analyze policy. Most modern central banks maintain at least one DSGE model.
Example: The ECB's DSGE simulations suggest the rate hike will reduce inflation by 0.4 points over two years.
Usage notes
DSGE models grew out of real business cycle theory in the 1980s and New Keynesian economics. They were criticized after the 2008 crisis for lacking a meaningful financial sector, prompting extensions that add banks and credit frictions. The New York Fed publishes regular forecasts from its own DSGE model.
Related abbreviations
More economics abbreviations
- BRICS – Brazil, Russia, India, China and South Africa
- CAD – Current account deficit
- CBA – Cost-benefit analysis
- CCI – Consumer Confidence Index
- COLA – Cost-of-living adjustment
- CPI – Consumer price index
- DWL – Deadweight loss
- ECB – European Central Bank
- EMU – Economic and Monetary Union
- ERM – Exchange Rate Mechanism
- FDI – Foreign direct investment
- FFR – Federal funds rate