Making a match: Combining theory and evidence in policy-oriented macroeconomic modeling
Kapetanios, G, Pagan, A., & Scott, A. (2007) Making a match: Combining theory and evidence in policy-oriented macroeconomic modeling. Journal of Econometrics, 136(2), pp. 565-594.
A persistent question in the development of models for macroeconomic policy analysis has been the relative role of economic theory and evidence in their construction. This paper looks at some popular strategies that involve setting up a theoretical or conceptual model (CM) which is transformed to match the data and then made operational for policy analysis. A dynamic general equilibrium model is constructed that is similar to standard CMs. After calibration to UK data it is used to examine the utility of formal econometric methods in assessing the match of the CM to the data and also to evaluate some standard model-building strategies.
Keywords: Policy oriented economic modeling; Model evaluation; VAR models
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|Item Type:||Journal Article|
|Divisions:||Current > QUT Faculties and Divisions > QUT Business School
Current > Schools > School of Economics & Finance
|Deposited On:||24 Jun 2010 22:53|
|Last Modified:||29 Feb 2012 13:45|
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