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Econometrica 28:591-605 Clements MP, Hendry DF (1998) Forecasting economic time series. Cambridge Univsersity Press Cambridge, The Marshall Lectures on Economic Forecasting: Forthcoming Doornik JA, Hansen H (1994) A practical test for univariate and multivariate normality. Discussion paper, Nuffield College Doornik JA, Hendry DF (1997) Modelling dynamic systems using PcFiml9 for Windows. International Thomson Business Press, London Engle RF (1982) Autoregressive conditionaI heteroscedasticity, with estimates of the variance of United Kingdom inflations.
That model's coefficients are very constant over the full sampie, and they are close to the coefficients of the initial model (10) estimated over the (initial) subsampie. Only the measurement of the data changes, and that, only for the extended portion of the sampie. , relative to the isolikelihood model. Economically, the introduction of interest-bearing sight deposits requires a more general measure of the opportunity cost of holding money. Initially, the opportunity cost is the outside interest rate R LA .
The views in this paper are solely the responsibility ofthe author and should not be interpreted as reflecting the views ofthe Board ofGovernors ofthe Federal Reserve System, the Reserve Bank of Australia, or any other person associated with the Federal Reserve System or the Reserve Bank of Australia. I am grateful for the generous hospitality of the Reserve Bank of Australia, where I was on secondment when this research was begun. I also wish to thank Tony Brennan, Gordon de Brouwer, Julia Campos, Ed Nelson, Jerome Fahrer, Jon Faust, Steve Grenville, David Hendry, John Irons, Katarina Juselius, Neva Kerbeshian, Helmut Lütkepohl, Dieter Nautz, Athanasios Orphanides, Kevin Prestwich, Robert Subbaraman, Timo Teräsvirta, Jenny Wilkinson, Jürgen Wolters, and two anonymous referees for helpful comments and discussions.