Business cyclemeasurementwithsometheory

A methodtoevaluatecyclicalmodelsnotrequiringknowledgeoftheDGPandtheexact specificationoftheaggregatedecisionrulesisproposed.Wederiverobustrestrictions in aclassofmodels;usesometoidentifystructuralshocksinthedataandothersto evaluatetheclassorcontrastsub-models.Theapproachhasgoodproperties,evenin small samples,andwhentheclassofmodelsismisspecified.Themethodisusedtosort out therelevanceofacertainfriction(thepresenceofrule-of-thumbconsumers)ina standardclassofmodels