The Impact of Unexpected Shocks to the U.S. Economy: Impulse Response Functions Revisited(IRF)

Find This Content on the Updated Version of this Blog: whystudyeconomics.com   In a previous post the impulse response functions  for the German macroeconomic variables where estimated and graphically depicted using STATA. The dialogue focused on the interpretation of the impulse response graphs.  While that entry was concerned with the practical estimation of a model … More The Impact of Unexpected Shocks to the U.S. Economy: Impulse Response Functions Revisited(IRF)

Waiting for Consumers to Respond: The Error Correction Model for Long Term Numerial Relationships

There is a clear relationship between income and consumption that is present across time.  Although an increase in income does not necessarily translate into an instant increase in consumption, there is lag between changes in income and corresponding changes in consumption.  Obvious examples are the loss of a job which can reduce income substantially, but … More Waiting for Consumers to Respond: The Error Correction Model for Long Term Numerial Relationships

The Only Hope for Business/Economic Forecasting: Stationary Stochastic Processes

A stationary stochastic process generates data in a special way which makes it possible to attempt to forecast its future values.  The opposite of a stationary stochastic process is a non-stationary stochastic process which is commonly referred to as a random walk, and by definition if a time series is a random walk, it is … More The Only Hope for Business/Economic Forecasting: Stationary Stochastic Processes