"We show that the well-known numerical equivalence between two-stage least squares (2SLS) and the classic control function (CF) estimator raises an interesting and unrecognized puzzle. The classic CF approach maintains that the regression error is mean independent of the instruments conditional...

"Estimated dynamic stochastic equilibrium (DSGE) models are now widely used for empirical research in macroeconomics as well as for quantitative policy analysis and forecasting at central banks around the world. This paper reviews recent advances in the estimation and evaluation of DSGE models,...