An adaptation of Barro's model for anticipated money growth to a SAS computer program
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The rational expectations school holds that only unanticipated money growth affects real variables. To test this hypothesis one would need a model that separates anticipated and unanticipated money growth. Professor Robert J. Barro has proposed such a model (1977) which has gained wide acceptance among monetarist and rational expectation theorists. The purpose of this paper is to explain Barro’s justification of his model, to describe how this model was adapted to an SAS computer program, and then to report on the results obtained by this program using quarterly data from 1959 (QI) to 1983 (QIII).