There are a number of versions of the models that can be used
on this site, but most users are only interested in the current versions.
Each quarter the US model is reestimated based on the latest available
data, and sometimes small specification changes are made in this
updating process. There is thus
in effect a different version of the US model each
quarter. Each version is dated, where the date is the day of the release
of the forecast from the version.
Selected forecasts from each version are presented in
The Forecasting Record of the US Model, where
the first date is September 23, 1983.
The phrase "US model" is used
on this site to refer both to the generic model and to any particular version.
It would be too cumbersome to have a different name for each version.
The multicountry model is updated less often than is the US model, and
only three versions have been put on this site for use by others. The
"MC1" version is dated May 21, 1997, the "MC2"
version is dated December 27, 1998, and the "MC3" version is
dated April 27, 2001. The phrase "MC model" is
used on this site to refer both to the generic multicountry model and to
any particular version.
The phrase "ROW model" is used to refer
to the nonUS part of the MC model.
The main reference for this site is
Macroeconometric Modeling.
It is based, among other things, on two books:
Ray C. Fair, Testing Macroeconometric Models,
Harvard University Press, 1994,
(on site,
Amazon online order form
), which will be called the "1994 book" in what follows,
and Ray C. Fair, Specification, Estimation, and Analysis of
Macroeconometric Models, Harvard University Press, 1984,
(on site,
Amazon online order form
).
The 1994 book contains a
complete listing of the variables and equations of the version of
the MC model that existed at the time the book was written.
The US model is listed in
Appendix A of the book, and all the coefficient
estimates of the US stochastic equations
are presented in tables in Chapter 5 (called the
"Chapter 5 tables" on this site).
The ROW model is listed in
Appendix B of the book, and all the coefficient estimates
of the ROW stochastic equations are presented in
tables in Chapter 6 (called the "Chapter 6 tables" on this site).
The following lists the current versions of the US and MC models
and the relevant references:
US Model, current version (April 25, 2003)
 Equations (April 25, 2003): Appendix A and the Chapter 5 tables in
The US Model Workbook.
 Discussion: Macroeconometric Modeling and
The US Model Workbook.
The changes that were made from the April 27, 2001, version to the
current version are the following:
 Equation 1 (CS, consumer expenditures: services):
The time trend T has been added to the equation.
 Equation 3 (CD, consumer expenditures: durables):
The left hand side variable is now CD/POP  (CD/POP)_{1},
and on the right hand side (CD/POP)_{1} has been replaced
by DELD*(KD/POP)_{1}  (CD/POP)_{1}.
This incorporates a slightly different partial adjustment assumption.
 Equation 4 (IHH, residential investmenth):
The left hand side variable is now IHH/POP  (IHH/POP)_{1},
and on the right hand side (IHH/POP)_{1} has been replaced
by DELH*(KH/POP)_{1}  (IHH/POP)_{1}.
This incorporates a slightly different partial adjustment assumption.
Also, the asset variable has been dropped from the equation.
 Equation 5 (L1, labor forcemen 2554):
The variables log(WA/PH) and T have been dropped, and the variables
log(AA/POP)_{1} and UR have been added.
 Equation 6 (L2, labor forcewomen 2554):
The variable log(AA/POP)_{1} has been added.
 Equation 7 (L3, labor forceall others 16+):
The Variable T has been dropped, and the
variable log(AA/POP)_{1} has been added.
 Equation 9 (MH, demand deposits and currencyh):
The equation is now estimated under the
assumption of a fourth order autoregressive error term,
and a dummy variable has been added that is 1 in 1998:1 and 0
otherwise.
 Equation 11 (Y, productionf): The equation is now estimated in log
form, and the dummy variables D593, D594,
and D601 have been added to pick up the effects of the steel strike.
 Equation 12 (KK, stock of capitalf): The interest rate variable used
is now an estimate of the real AAA bond rate lagged twice. In addition,
another cost of capital variable has been added:
(CG_{2} + CG_{3} + CG_{4})/
(PX_{2}YS_{2} + PX_{3}YS_{3}
+ PX_{4}YS_{4}).
The left hand side variable is now log(KK/KK_{1}), and
the right hand side variables are in addition to the two cost of capital
variables: the constant term, log(KK/KKMIN)_{1},
log(KK_{1}/KK_{2}, and five change in output terms.
log(KK/KKMIN)_{1} is an estimate of the amount
of excess capital on hand.
 Equation 13 (JF, number of jobsf): All variables related to DD772 have
been dropped, and variable T has been dropped. The dummy variable D593
has been added to pick up effects of the steel strike. The excess
labor variable is now defined to be log[JF/(JHMIN/HFS)]_{1}.
 Equation 14 (HF, average number of hours paid per jobf):
All variables related to DD772 have
been dropped, and variable T has been dropped. The excess
labor variable is now defined to be log[JF/(JHMIN/HFS)]_{1},
and logHF_{1} is replaced by log(HF/HFS)_{1}..
 Equation 17 (MF, demand deposits and currencyf):
A dummy variable has been added that is 1 in 1998:1 and 0
otherwise.
 Equation 21 (CCF, capital consumptionf):
The dummy variables D811824 and D831834 have been dropped, and
nine dummy variables have been added to account for tax law
changes. The constant term has also been added.
 Equation 25 (CG, capital gains or losses on corporate stocks held
by h): The divisor is now PX_{1}YS_{1} rather
than GDP_{1}.
 Equation 27 (IM, imports): The variable T has been dropped, and the
equation is now estimated under the assumption of a second order
autoregressive error term.
 All the equations that are estimated by 2SLS have been estimated
using fewer first stage regressors. None of the equations now rejects
the overidentifying restrictions at the 95 percent confidence level. .
MC Model, current version (MC3) (April 27, 2001)
