Inside a Modern Macroeconometric Model (2^nd Ed., Softcover reprint of the original 2nd ed. 1997) A Guide to the Murphy Model

As Ken Wallis (1993) has pOinted out, all macroeconomic forecasters and policy analysts use economic models. That is, they have a way of going from assumptions about macroeconomic policy and the international environment, to a prediction of the likely future state of the economy. Some people do this in their heads. Increasingly though, forecasting and policy analysis is based on a formal, explicit model, represented by a set of mathematical equations and solved by computer. This provides a framework for handling, in a consistent and systematic manner, the ever-increasing amounts of relevant information. Macroeconometric modelling though, is an inexact science. A manageable model must focus only on the major driving forces in a complex economy made up of millions of households and fIrms. International economic agencies such as the IMF and OECD, and most treasuries and central banks in western countries, use macroeconometric models in their forecasting and policy analysis. Models are also used for teaching and research in universities, as well as for commercial forecasting in the private sector.

1 — Setting the Scene.- 1 How to Use this Book.- 2 Distinguishing Features of MM.- 3 Principal Mechanisms in MM.- 2 — Structural Form of MM.- 4 Overview of Part Two.- 5 Wage Behaviour.- 6 Labour Force Participation.- 7 Private Consumption Behaviour.- 8 Behaviour of the Rental Price of Housing.- 9 Production of Housing Rental Services and Investment in Dwellings.- 10 The Enterprise Production Block of the Business Sector.- 11 Business Fixed Investment.- 12 Business Sector Employment.- 13 Import Supply and Demand.- 14 Aggregate Export Supply.- 15 Disaggregation of Export Supply.- 16 Overseas Demand for ‘Commodity’ Exports.- 17 Inventory Investment in ‘Commodity’ Exports.- 18 Demand for Non-‘Commodity’ Exports.- 19 Domestic Good Inventory Investment.- 20 Price Dynamics for the Domestic Good.- 21 Sales of the Domestic Good; Miscellaneous Identities for Investment and Capital.- 22 The Government Sector.- 23 Financial Markets.- 24 National-Accounting, Stock-Flow and Miscellaneous Identities.- 3 — Simulations with MM.- 25 Introduction to the Simulations.- 26 Monetary Shocks.- 27 A Fiscal Shock.- 4 — New Horizons.- 28 MM2 — A Fully Integrated Macro-CGE Model.- References.- Author and Personal Names Index.- Tables.- Figures.- Exercises.

Principles referred to in the text are illustrated by numerical examples PC users can verify how various key ideas work in practice Archetype, miniature and stylised models are used to explain principles at work in the larger MM model Includes 85 tables, 72 figures and 42 exercises