A new classical econometric model of the world economy

Can a real business cycle model without price and wage stickiness explain UK real exchange rate behaviour?

“…The model is solved in the loglinearised form above using a projection method set out in Minford et al (1984Minford et al ( , 1986; it is of the same type as Fair and Taylor (1983) and has been used constantly in forecasting work, with programme developments designed to ensure that the model solution is not aborted but reinitialised in the face of common traps (such as taking logs of negative numbers); the model is solved by a variety of standard algorithms, and the number of passes or iterations is increased until full convergence is achieved, including expectations equated with forecast values (note that as this model is loglinearised, certainty equivalence holds). Terminal conditions implement the transversality conditions (implying current account balance) at the terminal date.…”

The Integration of Macro and Microeconomic Relations in Dynamic Policy Models: The Case of Saving and Investment Behavior

“…3_/ Edwards (1987) and Gavin (1988) Sachs (1983), Lipton and Sachs (1983), Minford et al (1986), Sachs and Roubini (1987), and Masson et al (1988). While adopting forward-looking expectations, several of these models incorporate a monetary sector and Keynesian features, such as slowly adjusting prices, unemployment, and liquidity constraints.…”

Target zones and exchange rate management: A stability analysis of the European Monetary System

“…The Liverpool model is a linked system of nine country models, all similar in design to the Liverpool model of the UK --see Minford et al (1986) for a detailed description. The key features of this model, which is estimated on annual data, are rational expectations, perfect capital mobility and wealth effects in consumption; markets clear continuously (in annual terms) subject to a variety of nominal contracts on bonds and wages (the latter have a maturity of one year).…”