Editing Macroeconomic model (section)

====DSGE versus CGE models====
{{Main|Computable general equilibrium}}
A methodology that pre-dates DSGE modeling is '''computable general equilibrium (CGE)''' modeling. Like DSGE models, CGE models are often [[microfoundations|microfounded]] on assumptions about preferences, technology, and budget constraints. However, CGE models focus mostly on long-run relationships, making them most suited to studying the long-run impact of permanent policies like the tax system or the openness of the economy to international trade.<ref>{{cite journal |last1=Shoven |first1=John B. |first2=John |last2=Whalley |year=1972 |title=A general equilibrium calculation of the effects of differential taxation of income from capital in the US |journal=[[Journal of Public Economics]] |volume=1 |issue=3–4 |pages=281–321 |doi=10.1016/0047-2727(72)90009-6 |url=http://cowles.yale.edu/sites/default/files/files/pub/d03/d0328.pdf |access-date=2019-07-12 |archive-date=2022-02-26 |archive-url=https://web.archive.org/web/20220226182525/https://cowles.yale.edu/sites/default/files/files/pub/d03/d0328.pdf |url-status=dead }}</ref><ref>{{cite journal |last1=Kehoe |first1=Patrick J. |first2=Timothy J. |last2=Kehoe |year=1994 |title=A primer on static applied general equilibrium models |journal=Federal Reserve Bank of Minneapolis Quarterly Review |volume=18 |issue=1 |pages=2–16 |url=http://www.minneapolisfed.org/research/qr/qr1821.pdf }}</ref> DSGE models instead emphasize the dynamics of the economy over time (often at a quarterly frequency), making them suited for studying business cycles and the cyclical effects of monetary and fiscal policy.