Taking Model to the Data with Hybrid Methods

Stochastically singularity and tensions between RBC (or DSGE) and VAR (or S-VAR), we need to employ the hybrid method, which relaxes the tension between them. In this point of view, the goal of this paper is the same as the goal of the research using S-VAR, I attempts to base on the power of economic theory while keeping up the flexibility of empirical methods using Kalman filter and Bayesian estimation.