Journal Article

Dynamic Equilibrium Economies: A Framework for Comparing Models and Data

Francis X. Diebold, Lee E. Ohanian and Jeremy Berkowitz

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 65, issue 3, pages 433-451
Published in print July 1998 | ISSN: 0034-6527
Published online July 1998 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/1467-937X.00052
Dynamic Equilibrium Economies: A Framework for Comparing Models and Data

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We propose a constructive, multivariate framework for assessing agreement between (generally misspecified) dynamic equilibrium models and data, which enables a complete second-order comparison of the dynamic properties of models and data. We use bootstrap algorithms to evaluate the significance of deviations between models and data, and we use goodness-of-fit criteria to produce estimators that optimize economically-relevant loss functions. We provide a detailed illustrative application to modelling the U.S. cattle cycle.

Journal Article.  0 words. 

Subjects: Economics

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