A Methodological Critique of New Keynesian and DSGE Models

2020 ◽  
Author(s):  
Narciso Túñez Area
Keyword(s):  
New Keynesian ◽  
Dsge Models

scholarly journals Misspecification and Expectations Correction in New Keynesian DSGE Models

2016 ◽  
Vol 78 (5) ◽  
pp. 623-649 ◽  
Author(s):  
Giovanni Angelini ◽  
Luca Fanelli
Keyword(s):  
New Keynesian ◽  
Dsge Models

From Linear to Nonlinear DSGE Models

2015 ◽  
Author(s):  
Edward P. Herbst ◽  
Frank Schorfheide
Keyword(s):  
Projection Methods ◽  
Order Perturbation ◽  
New Keynesian ◽  
Space Representation ◽  
Small Scale ◽  
Computational Techniques ◽  
Dsge Models ◽  
Linearization Technique ◽  
State Space Representation ◽  
Nonlinear Form

This chapter presents computational techniques that can be used to estimate DSGE models that have been solved with nonlinear techniques, such as higher-order perturbation methods or projection methods. From the perspective of Bayesian estimation, the key difference between DSGE models that have been solved with a linearization technique and models that have been solved nonlinearly is that in the former case, the resulting state–space representation is linear, whereas in the latter case, it takes the general nonlinear form. The chapter also highlights some of the features that researchers have introduced into DSGE models to capture important nonlinearities in the data, wherein it uses the small-scale New Keynesian DSGE model as illustrative example.

A legacy lost

2021 ◽  
pp. 265-286
Author(s):  
Michael Peneder ◽  
Andreas Resch
Keyword(s):  
General Theory ◽  
Business Cycle ◽  
General Equilibrium ◽  
New Keynesian ◽  
Final Part ◽  
Dsge Models ◽  
Real Business Cycle ◽  
Equilibrium Models ◽  
General Equilibrium Models ◽  
Left Behind

The final Part IV attends Schumpeter’s legacy. To begin with, this chapter examines how his monetary ideas got left behind during his lifetime and the subsequent decades. First, it addresses the success of Keynes. While his Treatise on Money had pre-empted the field by advocating some very similar ideas, the General Theory was even more detrimental to Schumpeter, precisely because Keynes had abandoned many of the very elements they had previously held in common. Next the chapter turns to the Neo-Keynesian synthesis, which attracted many of Schumpeter’s disciples at Harvard such as Paul Samuelson or James Tobin. After a brief discussion of monetarism, the attention finally turns to the evolution of modern general equilibrium models, beginning with its origin in the Real Business Cycle analysis and moving on to the New Keynesian DSGE models.

Testing monetary policy optimality using volatility outcomes: a novel approach

2016 ◽  
Vol 16 (2) ◽  
Author(s):  
Federico Ravenna
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Optimal Policy ◽  
The United States ◽  
New Keynesian ◽  
Model Parameters ◽  
Dsge Models ◽  
Optimal Monetary Policy ◽  
Novel Approach ◽  
Interest Rate Volatility

AbstractWe propose a method to assess the efficiency of macroeconomic outcomes using the restrictions implied by optimal policy DSGE models for the volatility of observable variables. The method exploits the variation in the model parameters, rather than random deviations from the optimal policy. In the new Keynesian business cycle model this approach shows that optimal monetary policy imposes tighter restrictions on the behavior of the economy than is readily apparent. The method suggests that for the historical output, inflation and interest rate volatility in the United States over the 1984–2005 period to be generated by any optimal monetary policy with a high probability, the observed interest rate time series should have a 25% larger variance than in the data.

scholarly journals Fiscal and monetary policy in new Keynesian DSGE models

2014 ◽  
Author(s):  
Πέτρος Βαρθαλίτης
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Open Economy ◽  
Small Open Economy ◽  
New Keynesian ◽  
Dsge Models ◽  
Dsge Model ◽  
Keynesian Model ◽  
Monetary And Fiscal Policy ◽  
Fiscal And Monetary Policy

This thesis is about monetary and fiscal policy in New Keynesian DSGE models. Chapter 2 presents the baseline New Keynesian DSGE model. Monetary policy is in the form of a simple interest rate Taylor-type policy rule, while fiscal policy is exogenous. Chapter 3 extends the model of Chapter 2 to include fiscal policy. Now, both monetary and fiscal policy are allowed to follow feedback rules. Chapter 4 sets up a New Keynesian model of a semi-small open economy with sovereign risk premia. Finally, Chapter 5 builds a New Keynesian DSGE model consisting of two heterogeneous countries participating in a monetary union.Throughout most of the thesis, policy is conducted via "simple", "implementable" and "optimized" feedback policy rules. Using such rules, the aim of policy is twofold: firslty, it aims to stabilize the economy when the latter is hit by shocks; secondly, it aims to improve the economy's resource allocation.

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