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Calibration
 

 

Identification of the numerical values of the parameters in an economic model by (1) using for some parameters the values obtained in other empirical and theoretical studies, (2) using informed judgement to make the best guess of the values for other parameters, (3) simulating the model, and (4) fine-tuning the parameter values by matching the model predictions with empirical observations. This procedure is most often used in the assessment of business cycle models.

 

Reference: Oxford Press Dictonary of Economics, 5th edt.