|
ARE TASTE AND TECHNOLOGY PARAMETERS STABLE? A TEST OF "DEEP" PARAMETER STATBILITY IN REAL BUSINESS CYCLE MODELS OF THE U.S. ECONOMY
Category: Econometrics
PARAMETER STABILITY Monday 26th August 2002, 14:30 - 16:00, Room: 4.9
Session Chair(s):
Jesus Crespo-Cuaresma, University of Vienna, AUSTRIA
|
Abstract:
|
Lucas criticized Keynesian models because of parametric instability. For many economists, the "Lucas critique" provided a reason to replace Keynesian models with equilibrium models of the business cycle. One example of the equilibrium approach is the Real Business Cycle (RBC) model. However, RBC models have not been subjected to the same scrutiny of tests of parameter instability. We present a prototypical RBC model and subject it to structural change tests. Our results document evidence of extensive parameter instability. Thus, the "Lucas critique is applicable and we conclude that the proptypical RBC model has an invalid structural form.
|
|
|
|
|
Find this file in the \Papers\1488\ folder of this CD-ROM.
|
|
|
Customise
|
Customise your Event Programme to include your favourite papers, and email details of papers to friends and colleagues with the
online Programme
|
|
|