15An advantage of our reduced-form estimates of the consumption function over the estimated dynamic stochastic general equilibrium models (DSGE, which started with the influential work of Smets and Wouters (2003); see An and Schorfheide (2007) for a review) is that we do not use informative priors. Our parameters could thus be used as an input for prior distributions (as in Del Negro and Schorfheide (2004)).