# Government Transfer Payments

## Changes to the FRB/US Model

- Federal and state and local (S&L) government net transfer payments (GFTN and GSTN) were consolidated into a single government transfer net payments variable (GTN).

Old model

    gftn - gftn_aerr = .01*pgdp*gft

    gftn - gftn_aerr = .01*pgdp*gft

New model

    gtn - gtn_aerr = .01*pgdp*gtr

- Real (deflated by PGDP) federal and S&L government net transfer payments (GFT and GST) were consolidated into a single government transfer net payments variable (GTR).

Old model

    gft - gft_aerr = (gftrd + gftrt)*xgdpt

    gst - gst_aerr = (gstrd + gstrt)*xgdpt

New model

    gtr - gtr_aerr = (gtrd + gtrt)*xgdpt

- The deviation of the ratios of federal and S&L transfers to GDP from their trend ratios were replaced by a single and consolidated variable, GTRD.

Old model

    gftrd - gftrd_aerr =
    y_gftrd(1)
     + y_gftrd(2)*gftrd(-1)
     + y_gftrd(3)*xgap2

    gstrd - gstrd_aerr =
    y_gstrd(1)
     + y_gstrd(2)*gstrd(-1)
     + y_gstrd(3)*xgap2

New model

    gtrd - gtrd_aerr =
    y_gtrd(1)*gtrd(-1)
     + y_gtrd(2)*xgap2

The eoxgenous variables GFTRT and GSTRT (Federal and State/Local government, trend ratio of transfer payments to GDP) have been combined to become GTRT.

## Some details of the changes and simplifications

- We have simplified and reduce the number of variables forming the government transfer payment block through the consolidation of the federal and S&L variables.