Baseball Skull Sessions

Unemployment in an estimate under the new Keynesian model: Jordi Gali

Jordi Gali, excellent economist and one of the most cited economists according to Thomson Scientific's Essential Science Indicators SM, currently professor of the Graduate School of Economics (Barcelona GSE).

Dr. George and his colleagues Frank Smets and Rafael Wouters, have written a very interesting paper entitled " Unemployment in an Estimated New Keynesian Model " in March 2011. Dr. Gali

mentioned in the introduction to this document that DSGE models formulated the concept of simplification is not introduced in structure to the unemployment variable, very important for the analysis of macroeconomic equilibrium.

As is known, in 2008, economists Chari, Kehoe and McGrattan present their criticisms of DSGE models (CKM Critism), where they believe that a large number of free parameters in the assessment process structural shocks, which opinion also agrees Frank Smets and Rafael Wouters, it is clear that these criticisms are also directed to techniques for estimating these models, as is the method Structural VAR (Vector Autoregressive) model equations reduced without restriction.

http://research.barcelonagse.eu/tmp/working_papers/541.pdf

While the model presented by Dr. Jordi Gali incorporates some of the considerations suggested by the, years before, is a better structure the previous model of Smets-Wouters.