A guide to FRB/Global

Abstract

: This paper describes the structure and illustrates the key features of FRB/Global, a large-scale macroeconomic model used in analyzing exogenous shocks and alternative policy responses in foreign economies and in examining the impact of these external shocks on the U.S. economy. FRB/Global imposes fiscal and national solvency constraints and utilizes errorcorrection mechanisms in the behavioral equations to ensure the long-run stability of the model. In FRB/Global, expectations play an important role in determining financial market variables and domestic expenditures. Simulations can be performed using either limited-information ("adaptive") or model-consistent ("rational") expectations. Keywords: macroeconometric models; long-run stability; rational expectations; fiscal and monetary policy; European Monetary Union. *Levin and Rogers are economists and Tryon is a section chief in the Division of International Finance, Board of Governors of the Federal Reserve System. We thank Shaghi...

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