A Note on the Identification Step in "A Semistructural Methodology for Policy Counterfactuals"

Abstract

The New Keynesian example of Beraja (2023) is not identified at its printed calibration: more than one structure satisfies every condition of its identification step. Two of the paper's six identifying restrictions coincide on equilibrium equations consistent with the printed reduced form, leaving eleven conditions to determine an equation's twelve coefficients. The note derives the rank condition the identification step requires, computable from the reduced form and the restrictions alone. The note also documents and corrects a misprint in the paper's counterfactual display. A one-clause amendment to the paper's Theorem 1 restores its conclusion.