The foundation DSGE models are nothing like regular statistical or machine learning models. They are general equilibrium models, a type of mathematical model th

The foundation DSGE models are nothing like regular statistical or machine learning models. They are general equilibrium models, a type of mathematical model the falls under the microeconomics area of economics. DSGE try to predict how an economical system will evolve over time, given agents preferences, technologies and institutions, how much will be produced, consumed, traded, prices and how those behave over time, taking into account stochastic impacts, like idk oil price fluctuation. They are beautiful theoretically, since they are micro constructed. See, economists don't like to use aggregates only to make predictions and infer policy impacts due to something called Lucas critique ( https://en.wikipedia.org/wiki/Lucas_critique https://en.wikipedia.org/wiki/Lucas_critique ) which basically means that taking an inflation series create an ARIMA(x,y,z) to predict next weeks CPI is theoretically. invalid. The estimation however, is usually based on Bayesian hierarchical models, taking the constraints imposed by the theoretical model, I believe. Here is a good source for that https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr554.pdf https://www.newyorkfed.org/medialibrary/media/research/staff... DSGE have been criticized for their low predictive power, but it can be said that in that for mid to long term predictions they are more robust for monetary and fiscal policy use.