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Home
Authors
Thomas J. Sargent
American
Economist
About the author
In the 1980s, there were occasions when it made sense to say, 'it is too difficult to maximize the likelihood function, and besides if we do, it will blow our model out of the water.'
Thomas J. Sargent,
American
Economist
#Will
#Sense
#Water
Lucas attended a conference on rational expectations at the University of Minnesota in the spring of 1973. The day after the conference, I received a call from Pittsburgh.
Thomas J. Sargent,
American
Economist
#Day
#University
#Expectations
#Spring
The first and most optimistic response was complete rational expectations econometrics. A rational expectations equilibrium is a likelihood function. Maximize it.
Thomas J. Sargent,
American
Economist
#First
#Expectations
There was a danger that skeptics and opponents would misread those likelihood ratio tests as rejections of an entire class of models, which of course they were not.
Thomas J. Sargent,
American
Economist
#Danger
#Opponents
#Tests
#Class