In this paper we review the evolution of macroeconomic modelling in a policy environment that took place over the past sixty years. We identify and characterize four generations of macro models. Particular attention is paid to the fourth generation - dynamic stochastic general equilibrium...

Many macroeconometric models are built to understand business cycles and (possibly) to predict recessions. But the methods applied to assess them are rarely of the form that one learns either whether they provide a good explanation of cycle characteristics or whether they can predict recessions....