How accounting accuracy affects DSGE models

Minseong Kim

MPRA Paper from University Library of Munich, Germany

Abstract: This paper explores how accounting consistency affects DSGE models. As many DSGE models descended from real business cycle models, I explore a simple labor-only RBC model with an exogenous external sector introduced. The conclusion reached in this paper is that once an external sector is introduced, DSGE models may suffer from accounting inconsistency, unless disequilibrium or some non-orthodox theory of price level, real monetary supply or bonds is accepted.

Keywords: accounting consistency; DSGE; external sector; fiscal deficit (search for similar items in EconPapers)
JEL-codes: B41 E13 E62 F41 (search for similar items in EconPapers)
Date: 2016-03-29
New Economics Papers: this item is included in nep-acc, nep-dge, nep-mac and nep-pke
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:70356

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