Rejoinder to Perspectival representation in DSGE models by Paweł Kawalec

Breaks in DSGE models

In this paper, we investigate the consequences of breaks in mean for the estimates of model parameters and the resulting inferences about the structure of the economy and policy implications. We explore the behavior of DSGE models that undergo occasional, but permanent shocks to the parameters that determine their steady state. We present a method for approximating the state space representatio...

Perspectival Models and Theory Unification

Given that scientific realism is based on the assumption that there is a connection between a model’s predictive success and its truth, and given the success of multiple incompatible models in scientific practice, the realist has a problem. When the different models can be shown to arise as different approximations to a unified theory, however, one might think the realist to be able to accommod...

Using Dsge Models

This paper is intended to be pedagogical rather than a presentation of original research. We describe a simple dynamic, stochastic general equilibrium (DSGE) model with capital utilization, capital adjustment costs, and a simple Cobb-Douglas technology to illustrate how DSGE models can be used to explain the past and to forecast the future. We identify one method to directly estimate latent var...

Econometric Issues in DSGE Models

Forecasting with DSGE Models

In this paper we review the methodology of forecasting with log-linearised DSGE models using Bayesian methods. We focus on the estimation of their predictive distributions, with special attention being paid to the mean and the covariance matrix of h-steps ahead forecasts. In the empirical analysis, we examine the forecasting performance of the New Area-Wide Model (NAWM) that has been designed f...