Macroeconometric Modelling for Policy Evaluation and Design
The paper reviews recent developments in macroeconomic theory and their implications for econometric modelling and for policy design. The following issues are addressed. 1) The theoretical and practical problems of modelling sequence economies. 2) Problems of evaluating the role of money given the absence of reasonable microfoundations for monetary theory. 3) The implications of the view that macroeconomic models should be viewed as non-cooperative differential games. 4) Identification and estimation of the policy-invariant structure of rational expectations models. 5) Time inconsistency of optimal plans and 6) The welfare economics of stabilization policy and the need to pay much greater attention to market structure if a market failure-based justification for stabilization policy is to be developed.
Published: Buiter, Willem H. "Macroeconometric Modelling for Policy Evaluation and Design." The Usefulness of Macroeconomic Models, Bank of England, (March 1981) , pp. 15-38.