Economists rely on Vector Autoregression (VAR) models to forecast macroeconomic time series that may infer the effects of structural shocks and estimate unobservable cyclical components of macroeconomic aggregates. A VAR model is made up of a system of equations that represents the relationships between multiple variables. For example, variables such as unemployment, interest, and inflation … Continue reading Vector Auto-Regression and Classical Economic Theory: Will the Keynesian Saga Ever End?