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160 CHAPTER 5. INTERNATIONAL REAL BUSINESS CYCLESInternational Real Business Cycles Summary1. The workhorse of real business cycle research is the dynamicstochastic general equilibrium model. These can be viewed asArrow-Debreu models and solved by exploiting the social planner’sproblem. They feature perfect markets and completelyfully ßexible prices. The models are fully articulated and arehave solidly grounded micro foundations.2. Real business cycle researchers employ the calibration method toquantitatively evaluate their models. Typically, the researchertakes a set of moments such as correlations between actual timeseries, and asks if the theory is capable of replicating these comovements.The calibration style of research stands in contrastwith econometric methodology as articulated in the Cowles commissiontradition. In standard econometric practice one beginsby achieving model identiÞcation, progressing to estimation ofthe structural parameters, and Þnally by conducting hypothesistests of the model’s overidentifying restrictions but how one determineswhether the model is successful or not in the calibrationtradition is not entirely clear.