This document, Macroeconometric Modeling (MC2 Version),
is the main reference for the MC2 model.
It contains a complete description
of the MC2 model, including the US model, which is part of the MC2 model.
It updates the material in Ray C. Fair,
Testing Macroeconometric Models,
Harvard University Press, 1994 (to be called the "1994 book"),
and it contains links to past work and to more recent work.
The chapter titles are the same as those in the 1994 book.
The 1994 book is a sequel to Ray C. Fair,
Specification, Estimation, and Analysis of
Macroeconometric Models, Harvard University Press, 1984 (to be called
the "1984 book"), and there are also links to this book in the
present document.
Some of the links are to html documents and some are to pdf
documents. You need an Adobe reader to read the pdf documents.
Some chapters of the 1994 book have been
transferred from a pdf document to an html document, and
when this was done the following conventions were adopted.
 Footnotes appear in square brackets in the text.
 <> denotes
"change in." It is used in place of the Greek capital delta.
 * denotes multiplication, as does a dot: ^{.}.
The links to articles and books in pdf format are not directly to the pdf
documents. The links are to "introductory" html documents from
which the pdf documents can be accessed. Each introductory html document
contains the abstract if there is one and some brief comments on the
work. This allows a brief look at the work without having to wait for
a pdf document to be loaded. Also, for books one can from the html
document link to a single chapter rather than the whole book, which
saves considerable loading time. The pdf files for the 1994 book are
much smaller than the pdf files for the other books. The 1994 book
was available in electronic form, whereas the other books had to be
scanned in.
There are two table of contents per chapter, one in the bar at the
top and one at the beginning of each chapter in the text. One small
point. If you link to a section using the table of contents at the
beginning of a chapter and you then want to go back to the table
of contents at the beginning of the chapter, you cannot do this using
the table of contents in the bar at the top. Instead, just click the
"back" option on your browser.
Outline
At the beginning of each chapter there is a brief discussion of where the
material came from, and links are provided to the relevant documents.
Be aware that when there is a link to a chapter in the 1994 book,
any model that is being discussed or analyzed in the chapter
is the one that existed
at the time the book was written, not a more recent version.
Not all chapters in the 1994 book have been updated to reflect the
MC2 version of the model. When a chapter has been so updated, it is
in html.
For ease of reference, this discussion at the beginning of each
chapter in this document is repeated below:
 Chapter 1: Introduction
This chapter gives a general view of where I think the type of work
on this site fits into the literature. It is a rallying cry for the
Cowles Commission approach, an approach I feel too many academic
researchers abandoned in the 1970s.
The chapter is reproduced almost exactly from the 1994 book.
A few changes have been made to correspond to the MC2 version of the
MC model.
If you would
like to read the original chapter in pdf format, the link is
1994 book.
 Chapter 2: Theory
This chapter discusses the theory upon which the specification of
the MC model is based. It
is reproduced exactly from the 1994 book. If you would
like to read the chapter in pdf format, the link is
1994 book.
 Chapter 3: The Data, Variables, and Equations
This chapter presents the data, variables, and equations of the MC2 model.
It is an update of Chapter 3 in the 1994 book.
It relies heavily on Appendices A and B, which are at the end of this
document.
 Chapter 4: Estimating and Testing Single Equations
The estimation and testing of macroeconometric models is discussed in
Chapters 4 and 7 of the
1994 book and Chapter 6 of the
1984 book. These chapters
have not been transferred to html, and so they must be read in
pdf format.
 Chapter 5: The Stochastic Equations of the US Model
This chapter discusses the specification, estimation, and testing of
the stochastic equations of the US model.
It is an update of Chapter 5 in the 1994 book.
It relies heavily on the Chapter 5 tables, which are at the end of this
document.
 Chapter 6: The Stochastic Equations of the ROW Model
This chapter discusses the specification, estimation, and testing of
the stochastic equations of the ROW model.
It is an update of Chapter 6 in the 1994 book.
It relies heavily on the Chapter 6 tables, which are at the end of this
document.
 Chapter 7: Estimating and Testing Complete Models
The estimation and testing of macroeconometric models is discussed in
Chapters 4 and 7 of the
1994 book and Chapters 6, 7,
and 8 of the
1984 book. These chapters
have not been transferred to html, and so they must be read in
pdf format.
 Chapter 8: Estimating and Testing the US Model
The complete US model is tested in Chapter 8 of the
1994 book and in Chapter 8
of the
1984 book. These chapters
have not been transferred to html, and so they must be read in
pdf format.
 Chapter 9: Testing the MC Model
The complete MC model is tested in Chapter 9 of the
1994 book and in Chapter 8
of the
1984 book. These chapters
have not been transferred to html, and so they must be read in
pdf format.
 Chapter 10: Analyzing Properties of Models
Techniques for analyzing the properties of macroeconometric models
are discussed in
Chapter 10 of the
1994 book and Chapters 9, 10,
and 11 of the
1984 book. These chapters
have not been transferred to html, and so they must be read in
pdf format. There is also more recent work discussing techniques for
analyzing properties of models. See
"Evaluating Alternative Monetary
Policy Rules" (with E.P. Howrey),
"A FiscalPolicy Rule for
Stabilization", and
"Estimated Stabilization Costs of
the EMU".
 Chapter 11: Analyzing Properties of the US Model
The properties of the US model are examined in Chapter 11 of the
1994 book and in Chapters 9, 10,
and 11 of the
1984 book. These chapters
have not been transferred to html, and so they must be read in
pdf format. There is also more recent work examining the properties of the
US model. See
"Evaluating Alternative Monetary
Policy Rules" (with E.P. Howrey).
 Chapter 12: Analyzing Properties of the MC Model
The properties of the overall MC model are examined in Chapter 12 of the
1994 book and in Chapters 9 and 10
of the
1984 book. These chapters
have not been transferred to html, and so they must be read in
pdf format. There is also more recent work examining the properties of the
MC model. See
"A FiscalPolicy Rule for
Stabilization",
"Estimated Stabilization Costs of
the EMU", and
"Estimated Inflation Costs Had
European Unemployment Been Reduced in the 1980s by Macro Policies".
 Chapter 13: Conclusion
Conclusions are contained in Chapter 13 of the
1994 book and in Chapter 12
of the
1984 book. These chapters
have not been transferred to html, and so they must be read in
pdf format.
 Appendix A: Tables for the US Model (MC2 Version)
This is an update of Appendix A in the
1994 book. It presents the US
model that is part of the MC2 model. The date of the US model
presented here is
November 3, 1998.
This appendix is the same as Appendix A in
The MC2 Model Workbook.
The latest version of the US model is presented in
Appendix A in The US Model Workbook.
 Appendix B: Tables for the ROW Model (MC2 Version)
This is an update of Appendix B in the
1994 book. It presents the ROW
model that is part of the MC2 model. The date of the ROW model
presented here is
December 27, 1998. This is the latest version of the ROW model
on this site. This appendix is the same as Appendix B in
The MC2 Model Workbook.
 Chapter 5 Tables: November 3, 1998
This is an update of the tables in Chapter 5 in the
1994 book. It presents the US
model that is part of the MC2 model. The date of the US model
presented here is
November 3, 1998.
These tables are the same as the Chapter 5 tables in
The MC2 Model Workbook.
The latest Chapter 5 tables are are presented in
The US Model Workbook.
 Chapter 6 Tables: December 27, 1998
This is an update of the tables in Chapter 6 in the
1994 book. It presents the ROW
model that is part of the MC2 model. The date of the ROW model
presented here is
December 27, 1998. This is the latest version of the ROW model
on this site. These Chapter 6 tables are the same as those in
The MC2 Model Workbook.
