Editing Computational economics (section)

=== Dynamic stochastic general equilibrium (DSGE) model ===
{{Main|Dynamic stochastic general equilibrium|l1=DSGE model}}

Dynamic modeling methods are frequently adopted in macroeconomic research to simulate economic fluctuations and test for the effects of policy changes. The DSGE one class of dynamic models relying heavily on computational techniques and solutions. DSGE models utilize micro-founded economic principles to capture characteristics of the real world economy in an environment with [[Intertemporal choice|intertemporal]] uncertainty. Given their inherent complexity, DSGE models are in general analytically intractable, and are usually implemented numerically using computer software. One major advantage of DSGE models is that they facilitate the estimation of agents' dynamic choices with flexibility.  However, many scholars have criticized DSGE models for their reliance on reduced-form assumptions that are largely unrealistic.