Essays in applied macroeconomics

A representative agent dynamic stochastic general equilibriummodel is to be exploited so as to encapsulate, within one single framework, news oriented permanent and transitory technology shocks as well as noise ones. Real news driven long-run effect aside, the channel by which such are to encroach upon short-run production and consumption, and, thereby, replicate the germane multifarious empirical growth patterns, is to be a labour augmenting and consumption amplifying signal coalescence empowered up to a finite volition degree, altogether representing the so-called confidence, to itself influence the representative intermediate goods production function as well as the representative household utility function. In such a way, all empirical economic activity responses to confidence shocks, to be normally captured by reduced form empirical VARs, are to be well reproduced, thus facilitating prediction and forecasting tasks. An empirical application to Western Europe, whereby orthogonalised impulse response functions in real activity upon consumer confidence shocks are to be appraised alongside forecast error variance decompositions and a panel data regression to account for the underlying causes behind confidence, is to, in fact, be conducted. Moreover, proof in favour the following contentions is provided: a V AR(p) in the measurable linear state-space system transition entries is to always be obtained upon full non-expected endogenous model variables measurability; a new structural shocks canonical empirical recovery check (SCERC) is to exist upon symmetric non-expected endogenous model variables measurability and immeasurability; upon asymmetric measurability and immeasurability thereof a standby minimal linear state-space system representation to the literature is to exist; Matlab suite DSGE solver Dynare is to generate non-minimal state-space systems.