I just went through the DSGE wiki page [1]. It says the following about the model, which if true, then I can see why it is an completely unserious model. > Bel

I just went through the DSGE wiki page [1]. It says the following about the model, which if true, then I can see why it is an completely unserious model. > Below is an example of the set of assumptions a DSGE is built upon: > Perfect competition in all markets > All prices adjust instantaneously > Rational expectations > No asymmetric information > The competitive equilibrium is Pareto optimal > Firms are identical and price takers > Infinitely lived identical price-taking households > to which the following frictions are added: > Distortionary taxes (Labour taxes) – to account for not lump-sum taxation > Habit persistence (the period utility function depends on a quasi-difference of consumption) > Adjustment costs on investments – to make investments less volatile > Labour adjustment costs – to account for costs firms face when changing the level of employment [1] https://en.wikipedia.org/wiki/Dynamic_stochastic_general_equilibrium https://en.wikipedia.org/wiki/Dynamic_stochastic_general_equ...