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A forward-looking multicountry model: MX3

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  • Joseph E. Gagnon

Abstract

This is paper discusses the theoretical structure and empirical properties of MX3, a multicountry macroeconometric model with rational expectations. MX3 is a medium-sized quarterly model of the United States, Japan, and West Germany. The primary objective of the model is to analyze the effect of fiscal and monetary rules on national economies in an international context. By incorporating rational expectations into almost all of the model's behavioral equations, MX3 takes a large step toward addressing the "Lucas critique" of model-based policy analysis.

Suggested Citation

  • Joseph E. Gagnon, 1989. "A forward-looking multicountry model: MX3," International Finance Discussion Papers 359, Board of Governors of the Federal Reserve System (U.S.).
  • Handle: RePEc:fip:fedgif:359
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    References listed on IDEAS

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    Cited by:

    1. Lewis S. Alexander & Joseph E. Gagnon, 1990. "The global economic implications of German unification," International Finance Discussion Papers 379, Board of Governors of the Federal Reserve System (U.S.).
    2. Jon Faust & Ralph W. Tryon, 1995. "Block distributed methods for solving multi-country econometric models," International Finance Discussion Papers 516, Board of Governors of the Federal Reserve System (U.S.).
    3. Catherine L. Mann, 1990. "Prospects for sustained improvement in U.S. external balance: structural change versus policy change," International Finance Discussion Papers 373, Board of Governors of the Federal Reserve System (U.S.).
    4. Catherine L. Mann, 1991. "Structural Change And Prospects For Sustained Improvement In U.S. External Balance," Contemporary Economic Policy, Western Economic Association International, vol. 9(1), pages 50-58, January.
    5. Jaime Marquez, 2000. "The Puzzling Income Elasticity of US Imports," Econometric Society World Congress 2000 Contributed Papers 1128, Econometric Society.
    6. Gagnon, Joseph E. & Masson, Paul R. & McKibbin, Warwick J., 1996. "German unification: What have we learned from multi-country models?," Economic Modelling, Elsevier, vol. 13(4), pages 467-497, October.
    7. Joseph E. Gagnon & Ralph W. Tryon, 1992. "Stochastic behavior of the world economy under alternative policy regimes," International Finance Discussion Papers 428, Board of Governors of the Federal Reserve System (U.S.).
    8. Andrew T. Levin & John H. Rogers & Ralph W. Tryon, 1997. "A guide to FRB/Global," International Finance Discussion Papers 588, Board of Governors of the Federal Reserve System (U.S.).
    9. Eric M. Leeper, 1990. "The dynamics of interest rate and tax rules in a stochastic model," International Finance Discussion Papers 375, Board of Governors of the Federal Reserve System (U.S.).

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    Keywords

    Japan ; Germany ; Econometric models;

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