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How accounting accuracy affects DSGE models

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  • Kim, Minseong

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.

Suggested Citation

  • Kim, Minseong, 2016. "How accounting accuracy affects DSGE models," MPRA Paper 70356, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:70356
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    File URL: https://mpra.ub.uni-muenchen.de/70356/1/MPRA_paper_70356.pdf
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    Cited by:

    1. Kim, Minseong, 2016. "The perils of first-order conditions of New Keynesian models," MPRA Paper 70753, University Library of Munich, Germany.

    More about this item

    Keywords

    accounting consistency; DSGE; external sector; fiscal deficit;
    All these keywords.

    JEL classification:

    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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