ON MACROECONOMIC POLICY AND MACROECONOMETRIC MODELS

Macroeconometric models provide a formal and quantified framework that is an irreplaceable adjunct to the processes of policy thought This a rticle analyzes some recent developments in model structure and model use and the interactions between them. Two major areas in which recent research has contributed to the ongoing process of model development are considered, namely the 'supply-side' approach to wages and unemplo yment, and the modelling of the exchange rate- An improved vehicle for macroeconomic policy analysis is an objective of such developments, a nd some issues surrounding the use of macroeconometric models in polic y analysis are discussed