Non-nested tests of new classical versus Keynesian models', further evidence

This paper re-runs the experiment conducted by Dadkhah and Valbuena (1985), using data generated by the Australian, Canadian, Japanese, Swiss and Swedish economies. The aim of this exercise is to discriminate between new classical and Keynesian accounts of the business cycle. The results obtained in the present study are broadly supportive of Dadkhah and Valbuena's earlier findings in that the Keynesian model generally outperforms the new classical alternative.