New Keynesian Models and the Kydland and Prescott Test
AbstractThis paper evaluates New Keynesian models using RBC methods for a number of key macroeconomic variables. Its main findings are that the NK model provides a good description of the behaviour of real variables but performs very poorly when nominal variables are considered. The latter result is puzzling, given the success of NK models in replicating impulse response function and presents a challenge for current models.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0411003.
Length: 24 pages
Date of creation: 02 Nov 2004
Date of revision: 24 Nov 2004
Note: Type of Document - pdf; pages: 24. This paper evaluates NK models using RBC methods and finds that they have difficulty matching the data.
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New Keynesian; Business Cycles; Inflation;
Find related papers by JEL classification:
- E - Macroeconomics and Monetary Economics
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