In a structural VAR, a restriction that describes the impact of the current-period value of one variable on the value of another variable in the distant future is known as a_____ restriction.
A)contemporaneous
B)long-run
C)short-run
D)structural

Question

Quizplus · Accepted Answer

A long-run restriction describes the impact of a current-period value of one variable on the value of another variable in the distant future. Contemporaneous restrictions describe the impact of a current-period value of one variable on the value of another variable in the same period. Short-run restrictions describe the impact of a current-period value of one variable on the value of another variable in the near future. Structural restrictions are used to identify the functional form of the model and the causal relationship between variables.

In a Structural VAR, a Restriction That Describes the Impact