The Biggest Conceptual Difference Between Using VARs for Forecasting and Using

question 44

Multiple Choice

The biggest conceptual difference between using VARs for forecasting and using them for structural modeling is that

• A)you need to use the Granger causality test for structural modeling.
• B)structural modeling requires very specific assumptions derived from economic theory and institutional knowledge of what is exogenous and what is not.
• C)you can no longer use the information criteria to decide on the lag length.
• D)structural modeling only allows a maximum of three equations in the VAR.

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Definitions:

Moral Obligations

Ethical duties or commitments that arise from principles of right and wrong behavior.

Desires

Strong feelings of wanting or wishing for something to happen or be obtained.

Maxim

A general truth, fundamental principle, or rule of conduct expressed in a concise and often pithy statement.

Categorical Imperative

A foundational concept in the moral philosophy of Immanuel Kant, which prescribes actions as universally mandatory, based on their maxims being capable of becoming universal law.