P* Type Models: Evaluation and Forecasts

Rowena Pecchenino and Robert Rasche

No 3406, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper critically evaluates the Federal Reserve's p* model of inflation, and develops a model of national income determination implicit in the p* formulation. We use this model to forecast the future paths of key macroeconomic variables and investigate its behavior under a variety of deterministic monetary policy rules. These forecasts and policy simulations suggest a dynamic economic behavior inconsistent with stylized facts, and lead us to question the underlying structure of the p* formulation.

Date: 1990-08
Note: ME
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Citations: View citations in EconPapers (6)

Published as International Journal of Forecasting. Volume 6, pp. 421-440, 1990.

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