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Theory, measurement, and calibration of macroeconomic models

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Paul Gomme
Peter Rupert

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Abstract

Calibration has become a standard tool of macroeconomics. This paper extends and refines the calibration methodology along several important dimensions. First, accounting for home production is important both in measuring calibration targets and in organizing the data in a model-consistent fashion. For this reason, thinking about home production is important even if the model under consideration does not include home production. Second, investment-specific technological change is included because of its strong balanced growth parameter restrictions. Third, the measurement strategy is laid out as transparently as possible so that others can easily replicate the underlying calculations. The data and calculations used in this paper are available on the web.

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Paper provided by Federal Reserve Bank of Cleveland in its series Working Paper with number 0505.

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Date of creation: 2005
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Handle: RePEc:fip:fedcwp:0505

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Keywords: Econometric models ; Macroeconomics;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  4. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1991. "Homework in Macroeconomics: Household Production and Aggregate Fluctuations," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1166-87, December. [Downloadable!] (restricted)
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  5. Robert J. Barro & Chaipat Sahasakul, 1983. "Average Marginal Tax Rates from Social Security and the Individual Income Tax," NBER Working Papers 1214, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Hornstein, Andreas & Praschnik, Jack, 1997. "Intermediate inputs and sectoral comovement in the business cycle," Journal of Monetary Economics, Elsevier, vol. 40(3), pages 573-595, December. [Downloadable!] (restricted)
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  7. Finn E. Kydland, 1993. "Business cycles and aggregate labor-market fluctuations," Working Paper 9312, Federal Reserve Bank of Cleveland. [Downloadable!]
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  12. Finn E. Kydland & Edward C. Prescott, 1990. "Business cycles: real facts and a monetary myth," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-18. [Downloadable!]
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  15. Seater, John J., 1985. "On the construction of marginal federal personal and social security tax rates in the U.S," Journal of Monetary Economics, Elsevier, vol. 15(1), pages 121-135, January. [Downloadable!] (restricted)
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  18. Rogerson, Richard, 1988. "Indivisible labor, lotteries and equilibrium," Journal of Monetary Economics, Elsevier, vol. 21(1), pages 3-16, January. [Downloadable!] (restricted)
  19. Greenwood, J. & Rogerson, R. & Wright, R., 1993. "Household Production in Real Business Cycle Thoery," RCER Working Papers 347, University of Rochester - Center for Economic Research (RCER).
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  22. Fisher, Jonas D. M., 1997. "Relative prices, complementarities and comovement among components of aggregate expenditures," Journal of Monetary Economics, Elsevier, vol. 39(3), pages 449-474, August. [Downloadable!] (restricted)
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  25. McGrattan, Ellen R & Rogerson, Richard & Wright, Randall, 1997. "An Equilibrium Model of the Business Cycle with Household Production and Fiscal Policy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 267-90, May.
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Paul Gomme & B. Ravikumar & Peter Rupert, 2008. "The Return to Capital and the Business Cycle," Working Papers 08002, Concordia University, Department of Economics. [Downloadable!]
    Other versions:
  2. Elizabeth M. Caucutt & Thomas F. Cooley & Nezih Guner, 2007. "The Farm, the City, and the Emergence of Social Security," NBER Working Papers 12854, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Magnus Jonsson, 2007. "The welfare cost of imperfect competition and distortionary taxation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(4), pages 576-594, October. [Downloadable!] (restricted)
  4. Fuentes-Albero, Cristina, 2007. "Technology Shocks, Statistical Models, and The Great Moderation," MPRA Paper 3589, University Library of Munich, Germany. [Downloadable!]
  5. Fabien Tripier, 2009. "Elasticity of factor substitution and the rise in labor's share of income during the Great Depression," Working Papers hal-00419343_v1, HAL. [Downloadable!]
  6. Kopecky, Karen A. & Koreshkova, Tatyana, 2009. "The Impact of Medical and Nursing Home Expenses and Social Insurance Policies on Savings and Inequality," MPRA Paper 16197, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  7. Paul Gomme, 2008. "Measuring the Welfare Costs of Inflation in a Life-cycle Model," Working Papers 08001, Concordia University, Department of Economics. [Downloadable!]
  8. David Backus & Espen Henriksen & Kjetil Storesletten, 2007. "Taxes and the Global Allocation of Capital," NBER Working Papers 13624, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  9. Stéphane Auray & Paul Gomme & Shen Guo, 2009. "Nominal Rigidities, Monetary Policy and Pigou Cycles," Cahiers de recherche 09-18, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke. [Downloadable!]
    Other versions:
  10. Basu, Parantap & Gillman, Max & Pearlman, Joseph, 2009. "Inflation, Human Capital and Tobin's q," Cardiff Economics Working Papers E2009/16, Cardiff University, Cardiff Business School, Economics Section. [Downloadable!]
  11. Benk, Szilárd & Gillman, Max & Kejak, Michal, 2009. "US Volatility Cycles of Output and Inflation, 1919-2004: A Money and Banking Approach to a Puzzle," CEPR Discussion Papers 7150, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  12. S. Boragan Aruoba & Christopher J. Waller & Randall Wright, 2009. "Money and capital: a quantitative analysis," Working Papers 2009-031, Federal Reserve Bank of St. Louis. [Downloadable!]
  13. Morris A. Davis & Robert F. Martin, 2008. "Housing, home production, and the equity and value premium puzzles," International Finance Discussion Papers 931, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  14. Alain Gabler & Omar Licandro, 2009. "Firm Dynamics Support the Importance of the Embodied Question," UFAE and IAE Working Papers 782.09, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
  15. Michael Ben-Gad, 2008. "Capital-Skill Complementarity and the Immigration Surplus," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(2), pages 335-365, April. [Downloadable!] (restricted)
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