Estimating the Long-Run Relationship Between Interest Rates and Inflation: A Response to McCallum
This note demonstrates that Bennett McCallum's recent critique of low frequency estimates of macro-economic relationships is of little empirical significance. It also demonstrates that readily available and frequently used techniques can be used to diagnose the problem McCallum raises. Finally, it shows that the standard critique of expectational distributed lags is not warranted once the role of learning by economic agents is recognized.
|Date of creation:||Apr 1990|
|Date of revision:|
|Publication status:||published as Summers, Lawrence H. "Estimating the Long-Run Relationship between Interest Rates and Inflation." From Journal of Monetary Economics, Vol. 18, No. 1, pp. 77-86, (July 1986).|
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- Martin Feldstein & Lawrence Summers, 1978.
"Inflation, Tax Rules, and the Long Term-Interest Rate,"
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