>>13979199There's no "best" model because different models are designed to answer different questions. There's no be-all-end-all model that explains all of economics just like there's no be-all-end-all model that explains any other discipline. What model you want to use depends on what you want to do.
>>13979293They use a set of large-scale custom-made jack-of-all-trades heterogeneous-agent neo-keynesian models together with smaller more specialized models. Jack-of-all-trades means they have equations for different aspects of the economy, heterogeneous-agent means they have different types of agents with their own behaviors, and neo-keynesian means they have firms that have monopoly power allowing them to set market prices. The large-scale models have a lot of breadth but sometimes have to give up depth for tractability. The smaller more specialized models are used to fill in the gaps. So central banks use a mix of custom-made and already established models. All research and documentation is generally publicly available on central bank websites.
>>13979299>>13979329DSGE is just a fancy way of saying you've got a closed model with dynamics and random variables. The canonical neoclassical model augmented with technology shocks everyone learns in second year is a DSGE model and so is any model derived from it. There's nothing wrong with the framework in and of itself.
>>13979563If this divide is between people who say business cycles are the economy responding efficiently to random technology shocks and people who say business cycles are the economy being inefficient, then the second group definitely won out. There's ample evidence that prices don't adjust immediately and that supply and demand is sometimes off-equilibrium. We also know that monetary policy has real effects on the economy. In any case, the "Chicago vs Keynesian" debate isn't a thing because you won't find anyone claim that technology shocks aren't important or that monetary shocks don't exist.
