In contrast to an earlier article in the Review by Artis and Nobay (no. 49, August 1969), this paper obtains equations for the UK similar to those of the Federal Reserve Bank of St. Louis for the US economy. Such equations have strong monetarist policy implications. However, quite apart from the substantial criticism in the economic literature of the theoretical and methodological basis of such equations, the paper shows that the apparently well-specified equations obtained are very sensitive to the choice of explanatory variables. Thus even on purely empirical grounds, St. Louis models can have little relevance for the UK.
ASJC Scopus subject areas
- Economics, Econometrics and Finance (all)