ABSTRACT
The model obtained in this way depends on the Base Run trajectory about which the non-linear model is being linearised. The Base Run trajectory should be the trajectory that the controlled economy is supposed to follow, in accordance with the development of equation (8) of Chapter XII. However, the implementation of the non-linear model was such that it was difficult to make the Base Run different from the trajectory defined by the actual histories of the exogenous and endogenous variables over the period 1970-9. This was therefore the trajectory about which the linearisation was performed. Although this was not the most appropriate trajectory, the resulting model was good enough for our purposes, since the performance of the policy rules obtained from it was very similar when applied to either the linear or the non-linear model.
