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Revisited : Money-Based Inflation Forecasts with a Changing Equilibrium Velocity
| Content Provider | Semantic Scholar |
|---|---|
| Author | Orphanides, Athanasios Porter, Richard D. |
| Copyright Year | 1998 |
| Abstract | This paper implements recursive techniques to estimate the equilibrium level of M2 velocity and to forecast in ation using the P model. The recursive estimates of equilibrium velocity are obtained by applying regression trees and least squares methods to a standard representation of M2 demand, namely a model in which the velocity of M2 depends on the opportunity cost of holding M2 instruments. Equilibrium velocity is de ned as the level of velocity that would be expected to obtain if deposit rates were at their long-run average (equilibrium) value. We simulate the alternative models to obtain real-time forecasts of in ation and evaluate the performance of the forecasts obtained from the alternative models. We nd that, while a P model assuming a constant equilibrium velocity does not provide accurate in ation forecasts in the 1990s, a model based on our time-varying equilibrium velocity estimates does quite well. |
| File Format | PDF HTM / HTML |
| Alternate Webpage(s) | http://directory.umm.ac.id/Data%20Elmu/jurnal/J-a/Journal%20of%20Economics%20and%20Business/Vol52.Issue1-2.Jan2000/5123.pdf |
| Alternate Webpage(s) | http://www.federalreserve.gov/pubs/feds/1998/199826/199826pap.pdf |
| Alternate Webpage(s) | https://www.federalreserve.gov/pubs/feds/1998/199826/199826pap.pdf |
| Language | English |
| Access Restriction | Open |
| Subject Keyword | Aggregate data Appendix Decision tree Entity Name Part Qualifier - adopted Estimated Guanosine Diphosphate Instrument - device Kind of quantity - Equilibrium Least squares Maturity onset diabetes mellitus in young Microsoft Outlook for Mac Money P (complexity) Printing Projections and Predictions Real-time clock Recursion Simulation Trees (plant) Velocity (software development) |
| Content Type | Text |
| Resource Type | Article |
