Abstract
This chapter is structured as follows: in this section, the form chosen for the domestic good’s price dynamics is set out, together with a short discussion of the equation’s steady state. Then in section 20.2, notation is tabulated, estimated coefficients are reported, and the dynamics of the price of the domestic good is illustrated pictorially for the cases of a temporary fiscal contraction and a temporary rise in the overseas price of ‘commodity’ exports.
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See the last footnote on p.187.
It also seems possible that the prices p and py MR may be measured in different units. The former variable is measured as an inydex number with base 1984–85; the units of p have to be inferred from the units of measurement of the price variables in Table 10.42 (p. 159). With the exception of the wage rate WB, which is measured in thousands of current dollars per quarter, the other prices there are measured as index numbers on the same base as p . The units in which py MR is measured in principle depend also on the coefficients A1, A 2, A3, A4, A5, A6 appearing in the CES-CET production structure (Figure 10.2.1, p.151), most of which are subject to within-sample trends.
By ‘final form we mean an equation involving just a function of py on the left, and functions of MM’s exogenous variables (listed below in the unshaded rows of Appendix 2.1) on the right. The dynamic equation for the price of domestic output in the TRYM model takes two pages to write down (see Taplin, Jilek, Antioch, Johnson, Parameswaran and Louis (1993), pp. 100–102).
Ibid., p. II—23.
The shock was a temporary reduction of two per cent in general government purchases of consumption goods lasting four quarters.
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© 1995 Springer-Verlag Berlin Heidelberg
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Powell, A.A., Murphy, C.W. (1995). Price Dynamics for the Domestic Good. In: Inside a Modern Macroeconometric Model. Lecture Notes in Economics and Mathematical Systems, vol 428. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-00771-6_20
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DOI: https://doi.org/10.1007/978-3-662-00771-6_20
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