Mike Wickens, 28 January 2020

Where should the emphasis lie in macroeconometric modelling between the purity of the economic theory and empirical performance? The widespread use of DSGE models estimated by Bayesian methods has been accompanied by a downgrading of the role of statistical fit. This column reviews the issue and concludes that the challenge is to incorporate greater flexibility into the theory in such a way as to be compatible with both the theory and the data.

Stefan Gerlach, Reamonn Lydon, Rebecca Stuart, 21 July 2015

Despite being a mainstay of macroeconomic theory for the past half century, the Phillips curve often receives the death knell from various commentators. These critiques often rely on results from data samples spanning relatively short periods. Using the case of Ireland, this column argues that short-term idiosyncrasies can explain the failure of the model in these contexts. Taking a longer historical view, the Phillips curve remains a useful macroeconomic model, at least in the Irish context.

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