Fully specified DSGE models are increasingly successful in explaining observed macroeconomic data. Thinking about the specification of a certain equation in a DSGE approach has the drawback of imposing many implicit priors on the specification of the remaining equations. Mis-specifications in...

In this paper, we examine the cost of insurance against model uncertainty for the Euro area considering four alternative reference models, all of which are used for policy-analysis at the ECB. We find that maximal insurance across this model range in terms of a Minimax policy comes at moderate...