Is DSGE model dynamically inefficient?

General DSGE Modeling
1

Dear All,
I just have a basic theoretical question to ask, is DSGE model dynamically inefficient when it deviates from steady state? I am incorporating over generation lapping features into my DSGE model.
Thank you.
Best regards,
Jesse

2

There is no general answer to this question. The frictionless Ramsey-Cass-Koopmans model and its stochastic variant, the basic RBC model have agents choose consumption optimally and in a Pareto-efficient way. Thus, there is no dynamic inefficiency in those models. If you now start changing the structure and add frictions, things might change.