The Evolution of Macro Models at the Federal Reserve Board

Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series #97-29

42 Pages Posted: 15 Dec 1997

See all articles by Flint Brayton

Flint Brayton

Board of Governors of the Federal Reserve System

Andrew T. Levin

affiliation not provided to SSRN

Ralph W. Tryon

Board of Governors of the Federal Reserve System

John C. Williams

Federal Reserve Bank of New York

Date Written: May 29, 1997

Abstract

Large-scale macroeconomic models have been used at the Federal Reserve Board for nearly 30 years. After briefly reviewing the first generation of Fed models, which were based on the IS/LM/Phillips curve paradigm, the paper describes the structure and properties of a new set of models. The new models are more explicit in their treatment of expectations formation and household and firm intertemporal decision making. The incorporation of more rigorous theoretical microfoundations is accomplished while maintaining a high standard of goodness of fit. Simulations illustrate the effects of alternative assumptions about the formation of expectations and policy credibility on system properties.

JEL Classification: C50, E17, E52

Suggested Citation

Brayton, Flint and Levin, Andrew and Tryon, Ralph and Williams, John C., The Evolution of Macro Models at the Federal Reserve Board (May 29, 1997). Board of Governors of the Federal Reserve System Finance and Econ. Disc. Series #97-29, Available at SSRN: https://ssrn.com/abstract=38122 or http://dx.doi.org/10.2139/ssrn.38122

Flint Brayton

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Andrew Levin

affiliation not provided to SSRN

Ralph Tryon

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States
202-452-2368 (Phone)
202-736-5638 (Fax)

John C. Williams (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

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