Survey_CCTW_2

Abstract

We focus on the SmetsWouters model of the U.S. economy. The Smets-Wouters model is representative of current thinking in macroeconomics. It was recently published in the American Economic Review and is one of the best known of the empirically-estimated “new Keynesian” models. It is very similar to, and “largely based on” according to Smets and Wouters, another well-known empirically-estimated new Keynesian model developed by Christiano, Eichenbaum and Evans (2005). The Smets-Wouters model was highlighted by Michael Woodford (2009) as one of the leading models in his review of the current consensus in macroeconomics.