| Author/Presenter |
Atsushi Inoue (University of British Columbia) |
| Co-author |
Barbara Rossi (Duke University) |
| Title |
Which Structural Parameters Are "Structural"? Identifying the Sources of Instabilities in Economic Models |
| Abstract |
The objective of this paper is to identify which parameters of a model are stable over time. Existing works only test whether a given subset of parameters is stable, but cannot be used to find which subset of parameters is stable. We proposea new procedure that is informative on the nature of instabilities affecting macroeconomi models, and sheds light on the economic interpretation. Our empirical findings suggest that instabilities during the Great Moderation were mainly concentrated in the Euler and IS equations as well as in the monetary policy equation. |