One of the standard criticisms of the St. Louis reduced form approach has been their failure to provide a sound theoretical base to the proposition that nominal income is primarily determined by the money stock and government fiscal measures. In this respect Anderson in a recent article  attempts to set out a theoretical model with empirical conclusions to justify this proposition. The theoretical properties of this model have a close similarity to the empirical estimates found in previous St. Louis studies, see Anderson/Jordan  and Anderson/Carlson , and perhaps not surprisingly an empirical analysis for the U.S., for the period 1955(I)-1973 (IV), fails to reject the theory. In this paper we briefly portray the theoretical flavour of the Anderson model. Secondly we consider certain estimation problems and test for the existence of such a relationship for the U.K. Thirdly we examine the forecasting ability of the model with respect to nominal income, private expenditure, nominal imports and the velocity of circulation. Finally we examine the dynamic properties of the model and conclude on its overall performance.
|Number of pages||18|
|Publication status||Published - Dec 1978|
ASJC Scopus subject areas
- Statistics and Probability
- Mathematics (miscellaneous)
- Social Sciences (miscellaneous)
- Economics and Econometrics