Is Applied Monetary Policy Analysis Hard?
نویسندگان
چکیده
In this paper, I argue that applied monetary policy analysis is hard. In particular, all of our models are grossly deficient relative to the ideal, and this cannot be corrected in the medium term. This view has important implications for answering the Simsian question of whether any given change in policy analysis methods is progress or regress. As an application of these ideas, I assess the potential role of dynamic stochastic general equilibrium (DSGE) models to policy analysis. If DSGE models are modified so they can play all the functions as old-style models, progress or regress may be unclear. If these models are used in the roles for which they are best suited, they can make a vital positive contribution.
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