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Some Estimation Effects of Selecting Economic Policy Horizons for Macroeconomic Models *
Author(s) -
ADAM CHRISTOPHER M.
Publication year - 1980
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.1980.tb01690.x
Subject(s) - estimation , econometrics , economics , function (biology) , economic model , new horizons , statistical model , macroeconomics , statistics , mathematics , engineering , evolutionary biology , biology , management , spacecraft , aerospace engineering
A basic IS‐LM model is used to discuss how parameter estimates may be affected if the observation period on data collected by policy makers (the model builders) differs from that of agents whose behaviour generates the data but who are not policy makers. Estimates may be both biased and inconsistent. In addition. the statistical inconsistency is a function not only of the difference in time horizons. but of the values of the policy instruments used by the policy makers. Optimal economic policy here thus involves the establishment òf instrument settings and particular levels of statistical inconsistencies in the estimated models.