Front Matter

Front Matter

Author(s):
Hamid Faruqee, Douglas Laxton, Bart Turtelboom, Peter Isard, and Eswar Prasad
Published Date:
May 1998
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    1998 International Monetary Fund

    Cover design, charts, and composition: Theodore F. Peters Jr., Choon Lee, and IMF Graphics Section

    Library of Congress Cataloging-in-Publication Data

    MULTIMOD Mark III : the core dynamic and steady-state models / Douglas Laxton … [et al.]. — Washington, DC : International Monetary Fund, [1998].

    p. cm. — (Occasional paper, ISSN 0251-6365 ; no. 164)

    Includes bibliographical references.

    ISBN 1-55775-722-4

    1. Econometric models. 2. Economic forecasting — Econometric models. 3. Economic policy — Econometric models. 4. International finance — Econometric models. 5. Macroeconomics — Econometric models — Evaluation. I. Laxton, Douglas. II. Series: Occasional paper (International Monetary Fund); no. 164.

    HB141.M84 1998

    Price: US$18.00

    (US$15.00 to full-time faculty members and students at universities and colleges)

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    recycled paper

    Contents

    The following symbols have been used throughout this paper:

    • … to indicate that data are not available;

    • n.a. to indicate not applicable;

    • — to indicate that the figure is zero or less than half the final digit shown, or that the item does not exist;

    • - between years or months (e.g., 1994–95 or January–June) to indicate the years or months covered, including the beginning and ending years or months;

    • / between years (e.g., 1994/95) to indicate a crop or fiscal (financial) year.

    • “Billion” means a thousand million.

    Minor discrepancies between constituent figures and totals are due to rounding.

    The term “country,” as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.

    Preface

    This study, prepared in the Economic Modeling and External Adjustment Division (EMEAD) of the Research Department, describes the Mark III version of MULTIMOD, the IMF's multiregion macroeconometric model. The development of MULTIMOD Mark III resulted from a major effort during 1997 to incorporate several basic changes into the Mark II version. Douglas Laxton, senior economist, took command of the project and is largely responsible for the work that has been done. Peter Isard, Division Chief, interacted closely with Laxton, both in the ongoing decision-making process that accompanied the technical work and in managing the preparation of this paper. Hamid Faruqee was integrally involved in developing the analytic framework that underpins the new specification of consumption and saving behavior, and in drafting Section V. Bart Turtelboom contributed significantly to the development of the investment equations and prepared Section VI. Eswar Prasad prepared Sections VII and VIII.

    The Mark III version retains many of the features of earlier versions of MULTIMOD. It thus reflects substantial past work on the Mark II version by Paul Masson, Steven Symansky, and Guy Meredith, and on the Mark I version by Masson, Symansky, Richard Haas, and Michael Dooley. As Deputy Division Chief of EMEAD from 1987 to November 1995, Symansky also contributed to a series of refinements of the core Mark II model, along with the development of several extended versions of the Mark II model. Similarly, Meredith continued to work on MULTIMOD after completion of the initial version of Mark II, contributing to the foundations for the Mark III investment function. Masson and Meredith provided numerous constructive comments on an initial draft of this study, as did Peter Clark and Thomas Krueger.

    To an important extent, the conceptual improvements in the Mark III version reflect feedback from users outside the IMF. We are particularly grateful for comments and encouragement received from Ralph Bryant, John Helliwell, and Assaf Razin. Others outside the IMF have contributed importantly in more technical ways. We thank Richard Black for help with programming the macro used to derive the steady-state analogue model; Michel Juillard and Peter Hollinger for their efforts in developing a reliab le solution algorithm for solving forward-looking models; Hope Pioro for general programming assistance and help in creating the computer modeling system; and Irene Chan for work on the database.

    Within the IMF, the construction of the Mark III model and the preparation of this study involved extensive research assistance from Susanna Mursula and Dirk Muir, who provided outstanding support. Norma Alvarado and Helen Hwang also played major roles in the project, preparing the manuscript and shepherding it carefully toward publication. Elisa Diehl of the External Relations Department edited the study and coordinated its production. The authors alone are responsible for the shortcomings of the model and its analysis; the opinions expressed are theirs and do not necessarily reflect the views of the IMF.

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