In contrast, simulation results from the DRI macroeconometric
forecasting model of the U.
The inflation-unemployment relationship in major macroeconometric
models is governed in large part by the econometrics of the "price equation" or "wage-price block," which specifies that the inflation rate is a negative function of the level of unemployment.
This is a more general statement of principles underlying Lucas's (1976) critique of macroeconometric
models cannot be usefully forced into the mold of temporally ordered causal chains.
Unit root testing is now standard practice in applied macroeconometrics
If the models are interpreted as structural, on the other hand, the restrictions on error distributions adopted in atheoretical macroeconometrics
are not arbitrary renormalizations, but prior identifying restrictions.
Mishkin, "A Rational Expectations Approach to Macroeconometrics
," NBER Reporter (Winter 1982/3), pp.
A first step toward new open economy macroeconometrics
has been made, for example, by Ghironi (2000c).
In modern macroeconometrics
, the textbook procedure is to estimate parameters from the time series that are under study.
Asymmetry in business cycle time series is important for macroeconometrics
because linear and Gaussian models are incapable of generating asymmetric fluctuations.
Their results brought the issue of how to handle these nonstationary time series to th e fore in macroeconometrics
, and led to econometric methodologies that respected the potential for nonstationarity in important macroeconomic variables.