DSGE forecasts fall short compared to BVAR, impacting economic predictions.
The article compares how accurate different models are at predicting future economic trends. They looked at a complex model called DSGE and simpler ones like VAR and BVAR. The results show that the DSGE model is usually not as good at forecasting as the BVAR model. However, sometimes the DSGE model actually gives the most accurate predictions for certain things.