DP7539 | The 'Puzzles' Methodology: en route to Indirect Inference?

Publication Date

08/11/2009

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Abstract

We review the methods used in many papers to evaluate DSGE models by comparing their simulated moments with data moments. We compare these with the method of Indirect Inference to which they are closely related. We illustrate the comparison with contrasting assessments of a two-country model in two recent papers. We conclude that Indirect Inference is the proper end point of the puzzles methodology.