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We document the real-time forecasting performance for output and inflation of the New York Fed dynamic stochastic general equilibrium (DSGE) model since 2011. We find the DSGE's accuracy to be comparable to that of private forecasters before Covid, but somewhat worse thereafter.
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the economy into a liquidity trap, generating deflation. With nominal wages unable to adjust freely, real wages rise …, reducing hiring and catapulting the economy toward the high-unemployment steady state. Even after a short-lived liquidity trap …
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