The experiments begin in Chapter 3. The experiments in Chapter 3 are descriptive, and these can be very useful for introductory students. The experiments give students a feel for the data, especially for how variables change over time. All of Chapter 3 is introductory. Chapter 4 is also introductory; it contains descriptive experiments about the National Income and Product Accounts and the Flow of Funds Accounts.

The analysis begins in Chapter 5, where fiscal-policy effects are examined. This material is accessible to introductory students who have had the equivalent of the IS-LM model. (Although most introductory texts do not refer to the model that they are teaching as the "IS-LM" model, this is in fact the model that they are using.) The first four experiments pertain to changing government spending under different assumptions about monetary policy, which are standard IS-LM questions. The rest of the experiments in this chapter pertain to changing other fiscal-policy variables, and this can be skipped by introductory users if desired.

Chapter 6 discusses monetary-policy effects, and again this material is accessible to those who have had the equivalent of the IS-LM model. Going through the experiments in this chapter is a good way of getting introductory students to understand the tools that are available to the Federal Reserve to carry out monetary policy.

The first part of Chapter 7 discusses price shocks, and this material is accessible to those who have had the equivalent of the AS-AD model. The first two experiments concern changing the import price index, PIM, and these changes can be looked upon as shifts of the AS curve. Both of these experiments are good ways of showing how stagflation can arise. The second part of Chapter 7 examines wealth effects through stock market shocks, and this is intermediate material.

Chapter 8 is probably the limit for most introductory students. It discusses the macroeconomic consequences of deficit targeting. Going through the deficit-targeting experiments in this chapter brings together a lot of macroeconomics and is very useful review.

Chapters 9-13 are intermediate to advanced. Many of the experiments require changing coefficients in the equations and examining how the properties of the model differ for these changes. At the intermediate level this is an excellent way of getting students to have a deeper understanding of macroeconomic issues. The suggestions in Chapter 13 about imposing rational expectations on the model and making major changes to the model are for advanced users.

To summarize, the following is recommended for introductory users:

1. Chapter 1 - read carefully
2. Chapter 2 - look over and then use for reference purposes
3. Chapter 3 - do all the experiments
4. Chapter 4 - do all the experiments
5. Chapter 5 - do at least the first four experiments
6. Chapter 6 - do all the experiments
7. Chapter 7 - do the first two experiments
8. Chapter 8 - do all the experiments (good review material)

Everything in the workbook is accessible to intermediate users except perhaps for Sections 13.3 and 13.4.

The complete description of the US model is in Estimating How the Macroeconomy Works -- Fair (2004). The latest version of the model has been estimated through 2008:3. These estimates and the complete specification of the model are presented in The US Model Appendix A: October 30, 2008, which is an update of Appendix A in Fair (2004). See the Forecast Memo for the specification changes that have been made to the model from the version in Fair (2004).

The reference Fair (2004) should be read by those contemplating using the model for research. This reference may also be of interest to teachers who would like a deeper understanding of the model than can be obtained by reading Chapter 2 of this workbook. There are a number of experiments in Fair (2004) that may be of interest to discuss with advanced students.