Making a match: Combining theory and evidence in policy-oriented macroeconomic modeling

G. Kapetanios; A. Pagan; A. Scott

doi:10.1016/j.jeconom.2005.11.007

Making a match: Combining theory and evidence in policy-oriented macroeconomic modeling

G. Kapetanios, A. Pagan^*, A. Scott

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

30 Citations (Scopus)

Abstract

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.

Original language	English
Pages (from-to)	565-594
Number of pages	30
Journal	Journal of Econometrics
Volume	136
Issue number	2
DOIs	https://doi.org/10.1016/j.jeconom.2005.11.007
Publication status	Published - Feb 2007

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10.1016/j.jeconom.2005.11.007

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Making a match: Combining theory and evidence in policy-oriented macroeconomic modeling

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