DSGE models are
A)similar to RBC models but allow for shocks other than productivity shocks.
B)similar to RBC models, but government spending shocks play a major role.
C)similar to Keynesian models except in the long run.
D)similar to Keynesian models except in the short run.

Question

Quizplus · Accepted Answer

DSGE models are similar to RBC models in their focus on the role of technology and productivity shocks in determining business cycles. However, DSGE models also allow for other types of shocks, such as monetary policy shocks or shocks to household or firm expectations.

DSGE Models Are