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Theory, measurement, and calibration of macroeconomic models

Listed author(s):
  • Paul Gomme
  • Peter Rupert

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
Handle: RePEc:fip:fedcwp:0505
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