Near-Rational Alternatives and the Empirical Evaluation of Real Business Cycle Models
AbstractThis paper shows that if the consumers in a "standard" real business cycle (RBC) model are permitted to use near-rational decision rules -- that is, decision rules from which they suffer trivial utility losses -- then it is difficult to distinguish the standard model from several competing extensions on the basis of the models' implications for a small set of key time series statistics. Moreover, there exist near-rational alternatives to the standard model which reproduce exactly the values of these statistics in observed time series. These findings suggest that RBC researchers should examine much larger sets of second moments when evaluating the empirical performance of RBC models.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Carnegie Mellon University, Tepper School of Business in its series GSIA Working Papers with number 239.
Date of creation: Dec 1993
Date of revision:
Contact details of provider:
Postal: Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890
Web page: http://www.tepper.cmu.edu/
This paper has been announced in the following NEP Reports:
- NEP-DGE-2000-09-13 (Dynamic General Equilibrium)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Steve Spear).
If references are entirely missing, you can add them using this form.