Recent Developments and Challenges in DSGE Modeling at Central Banks: A Survey (in Korean)

The New Millenium has witnessed structural changes in the global economic environment with financial sectors amplifying business cycle fluctuations and cross-border capital flows dramatically increasing. Furthermore, since the global financial crisis in 2008, several central banks have faced an unprecedented policy environment in which private and public debt levels are surging, maintaining financial stability is augmented to their policy objectives, policy rates are kept at a low level. In contrast, New Keynesian DSGE models employed at major central banks and international organizations have been recently criticized to fail to incorporate the changes in economic and policy environments. This article surveys recent developments in DSGE modeling at central banks, summarizing four main avenues along which standard monetary DSGE models could be potentially improved for more effective macro policy analyses. First, introducing macro-financial linkage channels into DSGE models appears fairly essential for central banks to consider financial stability in their policy objectives. Second, the transmission mechanism of fiscal policy should be augmented to the existing models to explore monetary and fiscal policy interactions and other pivotal fiscal issues. Third, the recent trends of global financial market integrations as well as capital liberalization ignite the need to model open economy aspects in a more sophisticated way. Last, we should also pay much attention to address new issues in monetary policy such as assessing the effects of unconventional policy tools.