Date Added: Feb 2010
In this paper, the authors review the evolution of macroeconomic modelling in a policy environment that took place over the past sixty years. They identify and characterise four generations of macro models. Particular attention is paid to the fourth generation - dynamic stochastic general equilibrium models. They discuss some of the problems in how these models are implemented and quantified. Since the basic ideas of structural macro-econometric modelling were laid out by the Cowles Commission there has been substantial effort invested in turning their vision into a practical and relevant tool. Research and development has proceeded across a broad front but basically can be characterized as responses to four issues.