We use generalized method of moments to estimate a rational expectations aggregate demand-aggregate supply macroeconomic model for five European economies. Our aim is to examine whether supply or demand shocks have predominated in the major European economies during the post-war era and whether...

We compare different methods for estimating forwardlooking output and inflation equations and show that weak identification can be an issue in conventional GMM estimation. GMM and maximum likelihood procedures that impose the dynamic constraints implied by the forwardlooking relation on the...

Structural vector autoregression (SVAR) models are commonly used to investigate the effect of structural shocks on economic variables. The identifying restrictions imposed in many of these exercises have been criticized in the literature. This paper extends this literature by showing that, if...