State of the art in DSGE modeling

[Originally from Economics StackExchange]
I’m starting to work in DSGE modeling, and I would be thankful if someone could provide me a briefing in state of the art of DSGE modeling research (and maybe recent produced theory, say posterior to Calvo and Rotemberg pricing models).

Specifically: currently most prominent models and researches, probably their predecessor, also perhaps its findings and importance (improvement) relative to others, its uses, and some problems that those models could face. Also, I want to emphasize the uses, I understand the very basic theoretical background os such models, but I still don’t understand its practical uses, and how it can be related with time series econometric models.

I know this question may be a little bit broad, but I’m sure that someone who has experience with this topic would answer it easily.


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I am not entirely sure which direction this is supposed to go. In its generality your question is impossible to answer. DSGE is an extremely large model class that covers pretty much all of non-deterministic macro models. The state of the art will differ depending on which subject you are investigating. Monetary policy models for example differ from structural change or social security models.

As you refer to Calvo and Rotemberg you seem to be interested in monetary policy models. Here, state of the art may be Heterogenous Agent New Keynesian (HANK) Models, which are currently one of the most active areas of research. They have the big advantage of allowing to investigate heterogeneity, while maintaining the core of elements that central banks are interested in.

The connection between time series econometrics and DSGE models has been discussed at

Well, actually you made a really good point and made me realize maybe what I’m actually looking for, that is mainly what to build a DSGE for. I’m going to reformulate the question, trying not to fall into the same mistake. I appreciate your answer.