'Two Orthogonal Continents? Testing a Two-country DSGE Model of the US and the EU Using Indirect Inference' by Mai Le, David Meenagh, Patrick Minford and Mike Wickens: Discussion

摘要

The authors are to be congratulated on their very substantial effort to advance the available techniques for macroeconomic modelling and inference. The difficulties of making the connection between a valid theoretical modelling framework and the observed aggregate time series data are notorious and, indeed, it has been the historic failures of such projects that have stimulated the major advances in macroeconomic modelling technique-notably including rational expectations and cointegration methods.rnHow close are we currently to locating the modeller's Holy Grail, an approach that is both theoretically consistent and empirically convincing? The message of this work might appear not too encouraging at first sight, but there are nonetheless good reasons to think that the ultimate solution should lie somewhere in the direction it points out.