Time series analysis of residuals from the St. Louis model

The residuals of the equations of the St. Louis model are analyzed individually and in pairs, using time series techniques in an attempt to discover mis-specifications in the model, in the form of incorrect lags or missing variables. The relationships discovered are,checked both inside and outside the sample. A variety of mis-specifications are apparent, and a much improved specification should be possible. The assumption made in the model that money supply is exogenous does not agree with the data.