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Journal of Economic Perspectives: Vol. 10 No. 1 (Winter 1996)
JEP Volume. 10, Issue 1 | 
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The Empirical Foundations of Calibration
Article Citation
Hansen, Lars Peter, and
James J. Heckman. 1996. "The Empirical Foundations of Calibration."
Journal of Economic Perspectives,
10(1): 87-104.
DOI: 10.1257/jep.10.1.87
DOI: 10.1257/jep.10.1.87
Abstract
Interest in simulating recently developed dynamic stochastic general equilibrium models of the economy stimulated a demand for parameters. This has given rise to calibration as advocated by Finn E. Kydland and Edward C. Prescott (1982). This paper explores the implicit assumptions underlying their calibration method. The authors question that there is a ready supply of micro estimates available to calibrate macroeconomic models. Measures of parameter uncertainty and specification sensitivity should be routinely reported. They propose a more symbiotic role for calibration as providing signals to microeconomists about important gaps in knowledge, which when filled will solidify the empirical underpinning, improving the credibility of the quantitative output.
Article Full-Text Access
Full-text Article (Complimentary)
Authors
Hansen, Lars Peter (Irving B Harris School of Public Policy Studies, U Chicago)
Heckman, James J. (Irving B Harris School of Public Policy Studies, U Chicago)
Heckman, James J. (Irving B Harris School of Public Policy Studies, U Chicago)
JEL Classifications
C50: Econometric Modeling: General
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