Recent Developments in Macroeconomics : The DSGE Approach to Business Cycle in Perspective

I survey the so-called "new neoclassical synthesis" literature (that emerged allegedly as a synthesis between the real business cycle and the new Keynesian literatures) and its ubiquitous dynamic stochastic general equilibrium (DGSE) model, emphasizing the current practices in it. This includes presenting a toy model and showing what kind of dynamics among aggregate variables it produces, and the reverse-engineering strategy that mainstream macroeconomists use to enrich the dynamics of their models. I finally ponder such current practices and the criticisms brought by the recent crisis, venturing to explore future prospects