An Econometric Model of the US Economy: Structural Analysis in 56 Equations

Description

This book explores the US economy from 1960 to 2010 using a more Keynsian, Cowles model approach, which the author argues has substantial advantages over the vector autoregression (VAR) and dynamic stochastic general equilibrium (DSGE) models used almost exclusively today. Heim presents a robust argument in favor of the Cowles model as an answer to the pressing, unresolved methodological question of how to accurately model the macroeconomy so that policymakers can reliably use these models to assist their decision making. Thirty-eight behavioral equations, describing determinants of variables such as consumption, taxes, and government spending, are connected by eighteen identities to construct a comprehensive model of the real US economy that Heim then tests across four different time periods to ensure that results are consistent. This comprehensive demonstration of the value of a long-ignored model provides overwhelming evidence that the more Keynesian (Cowles) structural models outperform VAR and DSGE, and therefore should be the models of choice in future macroeconomic studies. Front Matter ....Pages i-xxx Introduction (John J. Heim)....Pages 1-36 Front Matter ....Pages 37-37 Methodology (John J. Heim)....Pages 39-114 Literature Review (John J. Heim)....Pages 115-146 The Consumption Models (John J. Heim)....Pages 147-184 Models Identifying the Determinants Of Investment Spending And Borrowing (John J. Heim)....Pages 185-219 The Exports Demand Equation (John J. Heim)....Pages 221-228 Statistically Estimated Real GDP Determination Functions (“IS” Curves) (John J. Heim)....Pages 229-238 Real GDP Determination Function ( “IS” Curve) Coefficients Aggregated from Parameter Estimates Obtained By Statistically Estimating The Subcomponent Functions Comprising The GDP (John J. Heim)....Pages 239-252 Methodology (John J. Heim)....Pages 253-258 Determinants Of The Prime Interest Rate – LM Curve Method (John J. Heim)....Pages 259-263 Determinants of Inflation - The Phillips Curve Model (John J. Heim)....Pages 265-271 Determinants of Unemployment (John J. Heim)....Pages 273-283 The Savings Functions (John J. Heim)....Pages 285-302 Determinants of Government Receipts (John J. Heim)....Pages 303-308 Endogeneity of Government Spending Levels (John J. Heim)....Pages 309-316 Capacity Of The Model To Explain Behavior Of The Macroeconomy Beyond The Period Used To Estimate The Model (John J. Heim)....Pages 317-330 Converting the Older Keynesian IS-LM Model To The More Modern AS-AD Interpretation Of The Keynesian Model (John J. Heim)....Pages 331-362 Dynamics (John J. Heim)....Pages 363-371 Summary and Conclusions (Production Side of the NIPA Accounts) (John J. Heim)....Pages 373-377 Front Matter ....Pages 379-379 Determinants of Factor Shares (John J. Heim)....Pages 381-444 Back Matter ....Pages 445-460