I just went through the DSGE wiki page [1]. It says the following about the model, which if true, then I can see why it is an completely unserious model.
> Below is an example of the set of assumptions a DSGE is built upon:
> Perfect competition in all markets
> All prices adjust instantaneously
> Rational expectations
> No asymmetric information
> The competitive equilibrium is Pareto optimal
> Firms are identical and price takers
> Infinitely lived identical price-taking households
> to which the following frictions are added:
> Distortionary taxes (Labour taxes) – to account for not lump-sum taxation
> Habit persistence (the period utility function depends on a quasi-difference of consumption)
> Adjustment costs on investments – to make investments less volatile
> Labour adjustment costs – to account for costs firms face when changing the level of employment
Are these not the 'friction can be ignored' assumptions of economics? They are, of course, blatantly false. But that doesn't stop such models from effectively modelling real-world behavior.
Granted, I know a slight bit about general equilibrium theory, but nothing about DSGE.
> Below is an example of the set of assumptions a DSGE is built upon:
> to which the following frictions are added: [1] https://en.wikipedia.org/wiki/Dynamic_stochastic_general_equ...