On October 6. 1979, the Federal Reserve announced what most people interpreted as a change in monetary policy. The purpose of this paper is to estimate the effects of this change on the 1980-81 economy. The effects of the change are estimated from simulations with my model of the U.S. economy...

Feldstein argues in his Fisher-Schultz Lecture that he has found, by accounting for inflation and taxes, large and significant rate of return effects on investment. His results are interesting because they seem to be robust to alternative specifications of the investment equation. Feldstein has...

This paper shows how probability questions can be answered within the context of macroeconometric models by using stochastic simulation. One can estimate, for example, the probability of a recession occurring within some fixed period in the future. Probability estimates are presented for two...

This paper uses stochastic simulation and my U.S. econometric model to examine the optimal choice of monetary policy instruments. Are the variances, covariances, and parameters in the model such as to favor one instrument over the other, in particular the interest rate over the money supply? The...

This paper considers the use of the polynomial distributed lag (PDL) technique when the lag length is estimated rather than fixed. We focus on the case where the degree of the polynomial is fixed, the polynomial is constrained to be zero at a certain lag length q, and q is estimated along with...

A forecast produced by an econometric model is a weighted aggregate of predetermined variables in the model. In many models the number of predetermined variables used is very large, often exceeding the number of observations. A method is proposed in this paper for testing an econometric model as...

Monthly data in physical units for seven industries are used to examine the production smoothing hypothesis. The results strongly support this hypothesis. Significant effects of expected future sales on current production are found for four industries, and the estimated decision equations for...

This paper compares results from the narrative approach of Romer and Romer (1989) to those from the structural approach regarding the effects of monetary policy on real output. The results from both approaches lead to the conclusions that monetary policy matters and that the effects build slowly...

This paper presents a way of estimating how accurate VAR models are likely to be for answering structural questions. Data are generated from a dynamic deterministic solution of a structural model; a VAR model is estimated using a subset of these data; and the properties of the VAR model are...

There has been much recent discussion about the ultimate sources of macroeconomic variability. A number of authors attribute most of this variability to only a few sources, sometimes only one. Although there may be only a few important sources, this is far from obvious, since economies seem...