Rational expectations and the St. Louis model for the U.K.

C. P. Ioannidis, K. G.P. Matthews

Research output: Journal PublicationArticlepeer-review


The purpose of this paper is to examine the forecasting ability of a reduced form macromodel in the absence of detailed knowledge of the economic structure, under the assumption of Rational Expectations. A reduced form model for the U.K. is estimated adopting the St. Louis specification, and its simulation properties are examined in the cases of anticipated and unanticipated changes in fiscal and monetary policies, in all cases the real output remains virtually undisturbed whilst the impact of the shocks is fully absorbed into the price level. Finally, the model's ex-ante forecasting performance is compared to the NIESR forecasts.

Original languageEnglish
Pages (from-to)87-102
Number of pages16
JournalEmpirical Economics
Issue number1
Publication statusPublished - Dec 1981
Externally publishedYes

ASJC Scopus subject areas

  • Statistics and Probability
  • Mathematics (miscellaneous)
  • Social Sciences (miscellaneous)
  • Economics and Econometrics


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