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Brian Romanchuk — The Curious Notation Of DSGE Models

Summary:
This article is an appendix to my earlier articles on dynamic stochastic general equilibrium (DSGE) model accounting (here and here). The problem with my understanding of DSGE appears to be that I assumed that the DSGE modellers were using mathematical notation in a standard fashion. I now realise that the secret sauce to DSGE modelling is a blatant disregard to mathematical notation. I had pointed out that I was missing something; my assumption that there were some super important theorems from microeconomics that everyone was invoking, but not formally specifying. Instead, the answer is much simpler: the notation used was misleading, if not outright incorrect.(I have been hit with a number of projects recently -- including a MMT presentation at Concordia University last night. As a

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This article is an appendix to my earlier articles on dynamic stochastic general equilibrium (DSGE) model accounting (here and here). The problem with my understanding of DSGE appears to be that I assumed that the DSGE modellers were using mathematical notation in a standard fashion. I now realise that the secret sauce to DSGE modelling is a blatant disregard to mathematical notation. I had pointed out that I was missing something; my assumption that there were some super important theorems from microeconomics that everyone was invoking, but not formally specifying. Instead, the answer is much simpler: the notation used was misleading, if not outright incorrect.

(I have been hit with a number of projects recently -- including a MMT presentation at Concordia University last night. As a result, this article is relatively brief and tentative. I will return to a more meatier conclusions when I discuss the treatment of the governmental sector. Note that my earlier articles hinted at what I discuss here, but I had not gone to far in formalising this. The formalisation is a key step; if the notation is wrong, the only way to deal with the problem is to fix the notation.)…
Bond Economics
The Curious Notation Of DSGE Models
Brian Romanchuk
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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