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Dynamic Programming is used to derive the optimal feedback solution to the minimization of a quadratic welfare loss-functional subject to a linear econometric model, when the value of some instrument variables can not be optimized in every model period, but only in single ones. In this way, the...
Persistent link: https://www.econbiz.de/10009511119
and their assumptions, the role of mathematics in economics, the way we conceptualize the relation between economics … (theory) and economy (empiria), as well as the general problem of comparing theories. In doing so we use the research … wrong language (mathematics) while they do not use proper language themselves while criticizing economics, namely the …
Persistent link: https://www.econbiz.de/10014191529
This paper illustrates two types of pitfalls in using linearization methods. First, if constraints are linearized before deriving optimality conditions, the derived conditions are not correct up to first order. Second, even when the behavior of the economy is correct to the first order, applying...
Persistent link: https://www.econbiz.de/10014216561
Estimates of potential output are an important ingredient of structured forecasting and policy analysis. Using information on consensus forecasts, this paper extends the multivariate filter developed by Benes and others (2010). Although the estimates in real time are more robust relative to...
Persistent link: https://www.econbiz.de/10013023270
Estimates of potential output are an important ingredient of structured forecasting and policy analysis. Using information on consensus forecasts, this paper extends the multivariate filter developed by Benes and others (2010). Although the estimates in real time are more robust relative to...
Persistent link: https://www.econbiz.de/10014412027
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In Bayesian analysis of dynamic stochastic general equilibrium (DSGE) models, prior distributions for some of the taste-and-technology parameters can be obtained from microeconometric or presample evidence, but it is difficult to elicit priors for the parameters that govern the law of motion of...
Persistent link: https://www.econbiz.de/10003730510
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