The Possibility of Ideological Bias in Structural Macroeconomic Models†

The Possibility of Ideological Bias in Structural Macroeconomic Models† AbstractAn ideologically biased expert faces trade-offs in model design. The perceived model must be autocoherent—its use by all agents delivers a self-confirming equilibrium. Policy may be influenced by manipulating the Keynesian multiplier or the Phillips curve parameters. Ideological bias may arise in a way that resembles well-known historical controversies. A larger reported Keynesian multiplier is favored by more left-wing economists, as is a flatter inflation output trade-off. Some combinations of parameters must be truthfully revealed, illustrating the tight link between parameter identification and the scope for bias that is implied by the autocoherence conditions. (JEL A11, D72, E12, E13, E52, E61, E62) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Macroeconomics American Economic Association

The Possibility of Ideological Bias in Structural Macroeconomic Models†

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Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7715
D.O.I.
10.1257/mac.20140154
Publisher site
See Article on Publisher Site

Abstract

AbstractAn ideologically biased expert faces trade-offs in model design. The perceived model must be autocoherent—its use by all agents delivers a self-confirming equilibrium. Policy may be influenced by manipulating the Keynesian multiplier or the Phillips curve parameters. Ideological bias may arise in a way that resembles well-known historical controversies. A larger reported Keynesian multiplier is favored by more left-wing economists, as is a flatter inflation output trade-off. Some combinations of parameters must be truthfully revealed, illustrating the tight link between parameter identification and the scope for bias that is implied by the autocoherence conditions. (JEL A11, D72, E12, E13, E52, E61, E62)

Journal

American Economic Journal: MacroeconomicsAmerican Economic Association

Published: Jan 1, 2018

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