Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174114
Authors: 
Meenagh, David
Minford, Patrick
Wickens, Michael R.
Xu, Yongdeng
Year of Publication: 
2016
Series/Report no.: 
Cardiff Economics Working Papers E2016/14
Abstract: 
This paper addresses the growing gulf between traditional macroeconometrics and the increasingly dominant preference among macroeconomists to use DSGE models and to estimate them using Bayesian estimation with strong priors but not to test them as they are likely to fail conventional statistical tests. This is in conflict with the high scientific ideals with which DSGE models were first invested in their aim of finding true models of the macroeconomy. As macro models are in reality only approximate representations of the economy, we argue that a pseudo-true inferential framework should be used to provide a measure of the robustness of DSGE models.
Subjects: 
Pseudo-true inference
DSGE models
Indirect Inference
Wald tests
Likelihood Ratio tests
robustness
JEL: 
C12
C32
C52
E1
Document Type: 
Working Paper

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