# Two Models of Measurements and the Investment Accelerator

@article{Sargent1989TwoMO, title={Two Models of Measurements and the Investment Accelerator}, author={Thomas J. Sargent}, journal={Journal of Political Economy}, year={1989}, volume={97}, pages={251 - 287} }

This paper describes two models of an agency that is collecting and reporting observations on a dynamical linear stochastic economy. The first is a "classical" model, with the agency reporting data that are the sum of a vector of "true" variables and a vector of measurement errors that are orthogonal to the true variables. The second is a model of an agency that uses an optimal filtering method to construct least-squares estimates of the true variables. These two models of the reporting agency…

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