Real Business Cycles

Chapter 24Calibration and Real Business Cycle Models: An Unorthodox Experiment^*

Journal of Macroeconomics 19(1), Winter 1997, pp. 1–17

JAMES HARTLEY Mount Holyoke College South Hadley, Massachusetts

KEVIN SALYER STEVEN SHEFFRIN University of California, Davis Davis, California

This paper examines the calibration methodology used in real business cycle (RBC) theory. We confront the calibrator with data from artificial economies (various Keynesian macroeconomic models) and examine whether a prototypical real business cycle model, when calibrated to these data sets using standard methods, can match a selected set of sample moments. We find that the calibration methodology does constitute a discriminating test in that the calibrated real business ...