Modeling Bilateral Exchange Rates in a Multi-Country Model

Abstract
The Multi-Country Model (MCM), under development in the International Finance Division at the Federal Reserve Board, is a system of linked national macro-economic models, at the center of which is a medium-sized model of the U.S. economy. Linked to it, and to each other, are models for Canada, West Germany, Japan, the United Kingdom, and an abbreviated model representing the rest of the world. The country models are connected by trade and capital flows, interest rates and prices.

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