Using the Murphy Model to Provide Short-run Macroeconomic Closure for ORANI |
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Authors: | JAMES H BREECE KEITH R McLAREN CHRISTOPHER W MURPHY ALAN A POWELL |
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Institution: | University of Maine, USA;Monash University, Clayton. Victoria 3168;Econtech. Australia;Monash University, Clayton, Victoria 3168 |
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Abstract: | A macro model incorporating rational expectations in financial markets (the Murphy Model–MM) is used to endogenize the macroeconomic environment for a comprehensive general equilibrium model (ORANI). The interface exploits the existence of variables which are endogenous to both models, calibrating on a shock to government spending. Prospective benefits include: (1) to the numerous policy oriented users of ORANI, a facility allowing the macroeconomic environment to be determined by a macrodynamic model such as MM; (2) to these users, reassurance that ORANI's short-run translates in calendar time to about two years; (3) to the clientele of a macro model, the possibility of much more detailed projections. |
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