{
  "title": "System Priors: Formulating Priors about DSGE Models' Properties",
  "publication": "IMF Working Papers, December 19, 2013",
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  "summary": "This paper proposes a novel way of formulating priors for estimating economic models. System priors are priors about the model's features and behavior as a system, such as the sacrifice ratio or the maximum duration of response of inflation to a particular shock, for instance.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Proposes a novel way of formulating priors for estimating economic models called \"system priors\".\n- Defines system priors as priors about the model's features and behavior as a system (examples given: the sacrifice ratio; the maximum duration of response of inflation to a particular shock).\n- Argues system priors provide a transparent and economically meaningful alternative to independent priors on individual parameters.\n- States system priors may complement or substitute for independent marginal priors.\n- Motivates, explains, and illustrates the approach using a structural model for monetary policy."
    },
    {
      "heading": "Key findings and concepts",
      "content": "- System priors target model-level properties (e.g., sacrifice ratio, duration of inflation response) rather than individual parameter distributions.\n- System priors help avoid unintended consequences that can arise from independent priors on individual parameters.\n- The paper illustrates the new philosophy within the context of a structural monetary policy model."
    },
    {
      "heading": "Methodology and illustration",
      "content": "- Uses a structural model for monetary policy to motivate, explain, and illustrate the formulation and application of system priors.\n- Contrasts system priors with independent marginal priors and discusses complementarities and substitutions between the two approaches."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Encourage the use of system priors to formulate priors that are economically meaningful and transparent.\n- Consider system priors as either a complement to or a substitute for independent marginal priors when estimating DSGE and related models.\n- Apply system priors when researcher interest focuses on model-level behaviors (for example, sacrifice ratio or persistence/duration of responses to shocks)."
    },
    {
      "heading": "Key statistics and publication metadata",
      "content": "- Authors: Michal Andrle, Jaromir Benes\n- Date: December 19, 2013\n- Pages: 26\n- Volume: 2013\n- Issue: 257\n- Series: Working Paper No. 2013/257\n- DOI: https://doi.org/10.5089/9781484318379.001\n- Stock No: WPIEA2013257\n- ISBN: 9781484318379\n- ISSN: 1018-5941\n- Citation preview (Chicago): Michal Andrle, and Jaromir Benes. \"System Priors: Formulating Priors about DSGE Models' Properties\", IMF Working Papers 2013, 257 (2013), accessed 9/17/2026, https://doi.org/10.5089/9781484318379.001\n\nIMF Working Papers — System Priors: Formulating Priors about DSGE Models' Properties\n\n---\n\n Content in this bundle\n\n- wp13257\n  - wp13257 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp13257 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/system-priors-formulating-priors-about-dsge-models-properties-41155"
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    "Authors: Michal Andrle, Jaromir Benes",
    "Published: December 19, 2013",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484318379.001",
    "Proposes a novel way of formulating priors for estimating economic models called \"system priors\".",
    "Defines system priors as priors about the model's features and behavior as a system (examples given: the sacrifice ratio; the maximum duration of response of inflation to a particular shock).",
    "Argues system priors provide a transparent and economically meaningful alternative to independent priors on individual parameters.",
    "States system priors may complement or substitute for independent marginal priors.",
    "Motivates, explains, and illustrates the approach using a structural model for monetary policy.",
    "System priors target model-level properties (e.g., sacrifice ratio, duration of inflation response) rather than individual parameter distributions.",
    "System priors help avoid unintended consequences that can arise from independent priors on individual parameters.",
    "The paper illustrates the new philosophy within the context of a structural monetary policy model.",
    "Uses a structural model for monetary policy to motivate, explain, and illustrate the formulation and application of system priors.",
    "Contrasts system priors with independent marginal priors and discusses complementarities and substitutions between the two approaches.",
    "Encourage the use of system priors to formulate priors that are economically meaningful and transparent.",
    "Consider system priors as either a complement to or a substitute for independent marginal priors when estimating DSGE and related models.",
    "Apply system priors when researcher interest focuses on model-level behaviors (for example, sacrifice ratio or persistence/duration of responses to shocks).",
    "Authors: Michal Andrle, Jaromir Benes",
    "Date: December 19, 2013",
    "Pages: 26",
    "Volume: 2013",
    "Issue: 257",
    "Series: Working Paper No. 2013/257",
    "DOI: https://doi.org/10.5089/9781484318379.001",
    "Stock No: WPIEA2013257",
    "ISBN: 9781484318379",
    "ISSN: 1018-5941",
    "Citation preview (Chicago): Michal Andrle, and Jaromir Benes. \"System Priors: Formulating Priors about DSGE Models' Properties\", IMF Working Papers 2013, 257 (2013), accessed 9/17/2026, https://doi.org/10.5089/9781484318379.001",
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