Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/83900
Authors: 
Minford, Patrick
Theodoridis, Konstantinos
Meenagh, David
Year of Publication: 
2007
Series/Report no.: 
Cardiff Economics Working Papers E2007/2
Abstract: 
We use the method of indirect inference to test a full open economy model of the UK that has been in forecasting use for three decades. The test establishes, using a Wald statistic, whether the parameters of a time-series representation estimated on the actual data lie within some confidence interval of the model-implied distribution. Various forms of time-series representations that could deal with the UK's various changes of monetary regime are tried; two are retained as adequate. The model is rejected under one but marginally accepted under the other, suggesting that with some modifications it could achieve general acceptability and that the testing method is worth investigating further.
Subjects: 
Bootstrap
Model Evaluation
Non-Linear Time Series Models
Indirect inference
open economy models
UK models
JEL: 
C12
C32
Document Type: 
Working Paper

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