I know i should have read it before. But I am lazy. Ok, to the point: Chari Kehoe and McGrattan paper is a must read for all of you guys (fagots like FK and FG) in love with this farsical thing dubbed SAMBA here in the tropics. If you have 1/2 of my IQ (most of you readers do not reach this threshold, let´s be honest) you will understand the main points. Summing up: those million shocks plugged into the SAMBA model are not really structural, and hence the model should not be used for policy analysis.
I dont like however their bashing of the Taylor Rule. Taylor is a nice guy, a hard worker. Further, assuming monetary policy shocks are a random walk sounds weird to me...why do they like it? Well, because then you do not need to artificially insert inertia into the calvo pricing mechanism (the usual strange assumption made by Smets and Wouters followers is that the guys not readjusting optimally do readjust automatically using past inflation) to get an inflation series sufficiently persistent so as to match the data.
Salut,
X
ps. celsô, je suis arrive a ton pays de naissance et je profite pour appendre un peu plus la langue italienne. on peut dire "ciao" aussi quand on arrive!
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