ABSTRACT
For this purpose we proceed by constructing a Base Run for the model for the years 1972-80 in the following way.
We also wish to rerun history into the future, to enable us to investigate the proposed policies over a longer time horizon. For this rerunning of future history, from the second quarter of 1980 to the first quarter of 1985 we take: (1) forecast values of the specified exogenous variables for the years 1980-5, and (2) the values of the other variables derived by applying these exogenous variables to the Treasury model. We then apply the present model to the same projected period, using the same specified exogenous variables. But at each point of time in each of our equations we add a residual or unspecified exogenous variable so that the calculated values of each of the variables in our present model, using the projected
The run of the model created from 1972 to 1985 in the manner described above we entitle the Base Run.
