Technological interrelatedness does imply autoregressive interrelatedness-a note on Palm, Pfann (1990)

Article Abstract:

The research examines solution properties for adjustment cost problems with a quadratic technology. The solutions are regarded as the bases for econometric requirements of dynamic factor demands. The study notes Palm and Pfann's (1990) contradictory conclusion that differs from established knowledge that technological interrelatedness of levels or changes of factor use suggests a non-diagonal matrix of autoregressive parameters for factor demands, regardless of the stochastic processes regulating the exogenous variables.

Models, Rational expectations (Economics)

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Hazards in implementing a monetary conditions index

Article Abstract:

An analytical and empirical characterization is made on 'Monetary Conditions Index' (MCI), using the properties of the models upon which the MCI is built. The usefulness of MCI in economic policy depend on the empirical and analytical assumptions of the models used. These assumptions include valid treatment of factors concerning dynamics, cointegration, parameter constancy, and omitted variables. The assumptions are tested by applications to Swedish, Norwegian and Canadian MCIs.

Economic Programs, Administration of Economic Programs, Research, Usage

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Hazards in implementing a monetary conditions index

Article Abstract:

A Monetary Conditions Index (MCI) represents the weighted sum of changes in a short-term interest rate and the exchange rate in relation to values in a baseline year. MCI is being used by the central banks of Canada, Sweden and Norway in conducting monetary policy. Analyzing its analytical and empirical properties, it was revealed that MCI as a basis for monetary policy may present some difficulties in the form of inconstancy and strongly exogenous variables.

Analysis, Canada, Evaluation, Sweden, Central banks, Norway

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