Time Consistency Requirement Implies Generalized Minimal State Variable Criterion

5 Pages Posted: 2 Oct 2019

Date Written: September 20, 2019

Abstract

We argue that the generalized from of the minimal state variable (MSV) criterion is required to satisfy the time consistency requirement of DSGE models.

Keywords: minimal state variable, MSV criterion, generalized MSV criterion, time consistency, DSGE, dynamic stochastic general equilibrium, equilibrium existence, equilibrium multiplicity, solution criterion, learning

JEL Classification: C62, C32, E10, E13, C61

Suggested Citation

Heartspring, William, Time Consistency Requirement Implies Generalized Minimal State Variable Criterion (September 20, 2019). Available at SSRN: https://ssrn.com/abstract=3457573 or http://dx.doi.org/10.2139/ssrn.3457573

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