Bayesian analysis of DSGE models

This paper reviews Bayesian methods that have been developed in recent years to estimate and evaluate dynamic stochastic general equilibrium (DSGE) models. We consider the estimation of linearized DSGE models, the evaluation of models based on Bayesian model checking, posterior odds comparisons, and comparisons to vector autoregressions, as well as the nonlinear estimation based on a second-order accurate model solution. These methods are applied to data generated from correctly specified and misspecified linearized DSGE models, and a DSGE model that was solved with a second-order perturbation method.Macroeconomics ; Vector autoregression

Can a Representative-Agent Model Represent a Heterogeneous-Agent Economy?

Accounting for observed fluctuations in aggregate employment, consumption, and real wage using the optimality conditions of a representative household often requires preferences that are incompatible with economic priors (e.g., Mankiw, Rotemberg, and Summers 1985). This discrepancy between the equilibrium model and the aggregate data is often viewed as evidence of the failure of labor-market clearing. We argue that such a conclusion is premature. We construct a model economy where all prices are flexible and all markets clear at all times but household decisions are not readily aggregated because of incomplete capital markets and the indivisible nature of the labor supply. We demonstrate that if we were to explain the model-generated aggregate time series using decisions of a fictitious" stand-in household, such a household is likely to have a non-concave or unstable utility. Our analysis suggests that the representative-agent model often fails to represent an equilibrium outcome of a heterogeneous-agent economy.Representative-agent model, Aggregation, Heterogeneity, Incomplete Markets, Indivisible Labor, GMM Estimation

Can a Representative-Agent Model Represent a Heterogeneous-Agent Economy?

Accounting for observed fluctuations in aggregate employment, consumption, and real wage using the optimality conditions of a representative household requires preferences that are incompatible with economic priors. In order to reconcile theory with data, we construct a model with heterogeneous agents whose decisions are difficult to aggregate because of incomplete capital markets and the indivisible nature of labor supply. If we were to explain the model-generated aggregate time series using decisions of a stand-in household, such a household must have a non-concave or unstable utility as is often found with the aggregate U.S. data.Representative-Agent Model, Heterogeneous Agent, Macroeconomics

Can a Representative-Agent Model Represent a Heterogeneous-Agent Economy

Published in American Economic Journal: Macroeconomics, 2009, https://doi.org/10.1257/mac.1.2.29</p

Development of Intermediate-Temperature Solid Oxide Fuel Cells for Direct Utilization of Hydrocarbon Fuels

In this study, we compare the performance of SOFC having composite Cu-based anodes but made with the following low-temperature electrolytes: samaria-doped ceria (SDC), Sr- and Mg-doped lanthanum gallate (LSGM), and scandia-stabilized zirconia (ScSZ). Performance (V-I) curves and impedance spectra were measured using H2 and n-butane fuels at 973 K. The results suggest that the use of electrolyte materials with higher ionic conductivity can lead to improved anodes for direct-utilization SOFC, although the performance of each of the cells in n-butane appears to be at least partially limited by the electrochemical oxidation reaction