The Cowles Commission Approach, Real Business Cycle Theories, and New Keynesian Economics

Ray Fair ()

No 3990, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The Cowles Commission approach is reviewed and compared to the approaches of real business cycle (RBC) theorists and new Keynesian economists. It is argued that RBC models are not tested in a serious enough way and that the new Keynesian literature is not empirical enough for testing even to be a serious possibility. Macroeconomics seems to be moving away from its traditional empirical basis, which is sad. This paper argues for returning to the path that was abandoned by most macroeconomists around 1970, namely the specification and testing of structural macroeconometric models.

Date: Written
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Related works:
Working Paper: The Cowles Commission Approach, Real Business Cycle Theories, and New Keynesian Economics (1992)
Journal Article: The Cowles Commission approach, real business cycles theories, and New- Keynesian economics (1992)
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