Background papers:
Altig, Christiano, Eichenbaum and Linde, Technology Shocks and Aggregate Fluctuations
Outline:
a. A Shock-Based Estimation Strategy - general idea
b. Implementation of Strategy: Estimation of Impulse Responses to Shocks, Using VAR's
i. Confidence
Intervals for Impulse Response Functions
ii. Encompassing
iii. Limited Information Bayesian Posterior Odds
iv. Identification using Long-Run Restrictions
v. Empirical 'Puzzles': Inflation Inertia, Output Persistence, Price Puzzle.
c. Implementation of Strategy: Fitting a `Standard' General Equilibrim Model To Estimated Shock Responses
i. Role of Monetary Policy in Determining Economic Response to Technology Shocks.
ii. Interpretation of `Price Puzzle'
iii. Resolution of Empirical Puzzles.
iv. Sticky Prices, wages.
v. Searching for a Theory of TFP.
d. A More `Serious' Model: Adding a Banking System and Net Worth Constraints to Investment.
The preliminary draft of the paper that is the
background for the discussion is available.