Book reviews: Christopher A. Sims, Macroeconomics and Reality

Abstract

 Two main ideas derive from a careful reading of the Macroeconomics and Reality study. The former one targets the appropriate nature of the methods used in macroeconomics and how they report to the economic reality. In this direction, Sims’ opinion looks radical. The mentions of the macroeconomic models (variables and equations) should rely on a set of data (empirical approach) or an analytical relation among different variables (theoretical approach). Sims explicitly excludes the mentions derived from purely statistical and econometric restrictions or other simplifying presumptions....