Why are Bayesian DSGE models appealing for policy analysis?

Remarks by Chairman Alan Greenspan at the Meetings of the American Economic Association, San Diego, California, January 3, 2004:

...the conduct of monetary policy in the United States has come to involve, at its core, crucial elements of risk management. This conceptual framework emphasizes understanding as much as possible the many sources of risk and uncertainty that policymakers face, quantifying those risks when possible, and assessing the costs associated with each of the risks. In essence, the risk management approach to monetary policymaking is an application of Bayesian decisionmaking.

Link for the full text, which elaborates the quote and gives examples:

http://www.federalreserve.gov/boarddocs/speeches/2004/20040103/default.htm www.federalreserve.gov/boarddocs/speeches/2004

References:

• http://sims.princeton.edu/yftp/bppolicy/bpPolicy.pdfSims (2002)
• http://lysander.ingentaselect.com/vl=211065/cl=60/nw=1/fm=docpdf/rpsv/cw/mitpress/15424766/v1n5/s4/p1123Smets and Wouters (2002)
• http://www.faculty.econ.northwestern.edu/faculty/christiano/research/ECB/paper.pdf Christiano, Motto, , and Rostagno (2004)