12. 1 Basic Principles of Building Macroeconomic Model o Basic principles of building macroeconomic model &s Researches indicate that many macroeconomic variables, including GDP, all have obvious features of time series Meanwhile, the latest researches also demonstrate macroeconomic variables have another important feature, i. e. random walk 友学经济学院
12.1 Basic Principles of Building Macroeconomic Model Basic principles of building macroeconomic model ❖ Researches indicate that many macroeconomic variables, including GDP, all have obvious features of time series. ❖ Meanwhile ，the latest researches also demonstrate macroeconomic variables have another important feature, i.e. random walk
12. 1 Basic Principles of Building Macroeconomic Model o Which is the most appropriate description? o blanchard Fisher's research y.=1.31=1=0.42X-2+e,-0060+0.25e1-2 o Implications: from 1940s to 1970s, in short term shocks led to fluctuations in economy, however, from theⅵ ew of long term, economy WI‖ recover automatically with the power of market o The result supports the view of Keynesian theory 友学经济学院
12.1 Basic Principles of Building Macroeconomic Model Which is the most appropriate description？ Blanchard & Fisher’s research Implications : from 1940s to 1970s，in short term， shocks led to fluctuations in economy，however, from the view of long term, economy will recover automatically with the power of market. The result supports the view of Keynesian theory 1 2 1 2 1.31 0.42 0.06 0.25 t = t− − t− + t − t− + t− Y Y Y e e e
12. 1 Basic Principles of Building Macroeconomic model o Lets see Campbell and Mankiw's research △X=C+02AX1+e1+008e1+0242 o Implications: shocks can have permanent influence on economy, and it,s impossible for economy to adjust automatically to the level before shocks o Real business-cycle theory emphasizes this point 友学经济学院
12.1 Basic Principles of Building Macroeconomic Model Let’s see Campbell and Mankiw’ s research Implications: shocks can have permanent influence on economy, and it’s impossible for economy to adjust automatically to the level before shocks. Real business-cycle theory emphasizes this point 1 1 024 2 0.2 0.08 0. t = + t− + t + t− + t− Y C Y e e e
12.1 Basic Principles of Building Macroeconomic Model ⊙conc| usIOns "s a model is a good model if it can pass the empirical test .o Even if a model can't pass the empirical test, we cant come to the conclusion that the model is wrong We should consider whether the logic in the model is reasonable For a macroeconomic model. we must check if it has a firm micro basis 友学经济学院
12.1 Basic Principles of Building Macroeconomic Model Conclusions ： ❖ A model is a good model if it can pass the empirical test. ❖ Even if a model can’t pass the empirical test, we can’t come to the conclusion that the model is wrong. ❖ We should consider whether the logic in the model is reasonable. For a macroeconomic model, we must check if it has a firm micro basis