In Nobel-prize-winner Robert Solow’s congressional testimony, quoted below, “DSGE” is an abbreviation for “dynamic stochastic general equilibrium.”
(p. 221) Solow argues: “It may be unusual for the Committee to focus on so abstract a question, but it is certainly natural and urgent. Here we are, still near the bottom of a deep and prolonged recession, with the immediate future uncertain, desperately short of jobs, and the approach to macroeconomics that dominates serious thinking, certainly in our elite universities and in many central banks and other influential policy circles, seems to have absolutely nothing to say about the problem. Not only does it (p. 222) offer no guidance or insight, it really seems to have nothing useful to say. . . . Especially when it comes to matters as important as macroeconomics, a mainstream economist like me insists that every proposition must pass the smell test: does this really make sense? I do not think that the currently popular DSGE models pass the smell test.”
Taylor, Timothy. “Recommendations for Further Reading.” Journal of Economic Perspectives 24, no. 4 (Fall 2010): 219-26.
(Note: ellipsis in original.)