Comparative Properties of Models of the Uk Economy∗

Abstract

This article describes the current versions of six leading macroeconometric models, focusing on their treatment of several current policy issues, namely the role of the housing market, the implications of ERM membership and, more generally, the relative effectiveness of fiscal and monetary policy. Differences in the modelling of the housing sector and the exchange rate are important in explaining differences in overall model properties which are revealed in standard policy simulations. Monetary policy is more potent than in previous versions of the models, which has important implications for the conduct of macroeconomic policy under ERM membership.