2,951 research outputs found
A Forecasting Metric for Evaluating DSGE Models for Policy Analysis
This paper evaluates the strengths and weaknesses of dynamic stochastic general equilibrium (DSGE) models from the standpoint of their usefulness in doing monetary policy analysis. The paper isolates features most relevant for monetary policymaking and uses the diagnostic tools of posterior predictive analysis to evaluate these features. The paper provides a diagnosis of the observed flaws in the model with regards to these features that helps in identifying the structural flaws in the model. The paper finds that model misspecification causes certain pairs of structural shocks in the model to be correlated in order to fit the observed data.Posterior predictive analysis; DSGE; Monetary Policy; Forecast Errors; Model Evaluation.
Genetic Transfer or Population Diversification? Deciphering the Secret Ingredients of Evolutionary Multitask Optimization
Evolutionary multitasking has recently emerged as a novel paradigm that
enables the similarities and/or latent complementarities (if present) between
distinct optimization tasks to be exploited in an autonomous manner simply by
solving them together with a unified solution representation scheme. An
important matter underpinning future algorithmic advancements is to develop a
better understanding of the driving force behind successful multitask
problem-solving. In this regard, two (seemingly disparate) ideas have been put
forward, namely, (a) implicit genetic transfer as the key ingredient
facilitating the exchange of high-quality genetic material across tasks, and
(b) population diversification resulting in effective global search of the
unified search space encompassing all tasks. In this paper, we present some
empirical results that provide a clearer picture of the relationship between
the two aforementioned propositions. For the numerical experiments we make use
of Sudoku puzzles as case studies, mainly because of their feature that
outwardly unlike puzzle statements can often have nearly identical final
solutions. The experiments reveal that while on many occasions genetic transfer
and population diversity may be viewed as two sides of the same coin, the wider
implication of genetic transfer, as shall be shown herein, captures the true
essence of evolutionary multitasking to the fullest.Comment: 7 pages, 6 figure
Posterior Predictive Analysis for Evaluating DSGE Models
In this paper, we develop and apply certain tools to evaluate the strengths and weaknesses of dynamic stochastic general equilibrium (DSGE) models. In particular, this paper makes three contributions: One, it argues the need for such tools to evaluate the usefulness of the these models; two, it defines these tools which take the form of prior and particularly posterior predictive analysis and provides illustrations; and three, it provides a justification for the use of these tools in the DSGE context in defense against the standard criticisms for the use of these tools.Prior and posterior predictive analysis; DSGE Model Evaluation; Monetary Policy.
- …