# Federal Government Expenditures

## Changes to the FRB/US model

- We have simplified and reduce the expenditure-side of the federal government sector.

- We have consolidated the federal government consumption (EGFO) and investment (EGFI) expenditure into one series (EGFE).

Old model

    d(log(egfo)) - egfo_aerr =
    y_egfo(1)
     + y_egfo(2)*log(egfo(-1)/egfot(-1))
     + y_egfo(3)* d(log(egfo(-1)))
     + y_egfo(4)* d(log(egfo(-2)))
     + y_egfo(5)*d(log(egfot))
     + y_egfo(6)* xgap2
     + y_egfo(7)* xgap2(-1)

    d(log(egfi)) - egfi_aerr =
    y_egfi(1)
     + y_egfi(2)*log(egfi(-1)/egfit(-1))
     + y_egfi(3)* d(log(egfi(-1)))
     + y_egfi(4)* d(log(egfi(-2)))
     + y_egfi(5)*d(log(egfit))
     + y_egfi(6)* xgap2
     + y_egfi(7)* xgap2(-1)

New model

    d(log(egfe)) - egfe_aerr =
    y_egfe(1)
     + y_egfe(2)*log(egfe(-1)/egfet(-1))
     + y_egfe(3)* d(log(egfe(-1)))
     + y_egfe(4)* d(log(egfe(-2)))
     + y_egfe(5)*d(log(egfet))
     + y_egfe(6)* xgap2
     + y_egfe(7)* xgap2(-1)

- We have done the same for their nominal (EGFON and EGFIN), trend (EGFOT and EGFIT) and relative price (PGFOR and PGFIR) counterparts.

Old model

    egfon - egfon_aerr = .01*pxp*pgfor*egfo

    egfin - egfin_aerr = .01*pxp*pgfir*egfi

New model

    egfen - egfen_aerr = pegfr*pxp*egfe*.01

Old model

    d(log(egfot)) - egfot_aerr
     = y_egfot(1)
     + y_egfot(2)*log(.01*pgfor(-1)*pxp(-1)*egfot(-1)/xgdptn(-1))
     + y_egfot(3)*(hggdpt + hggdpt(-1) + hggdpt(-2) + hggdpt(-3))/1600

    d(log(egfit)) - egfit_aerr
     = y_egfit(1)
     + y_egfit(2)*log(.01*pgfir(-1)*pxp(-1)*egfit(-1)/xgdptn(-1))
     + y_egfit(3)*(hggdpt + hggdpt(-1) + hggdpt(-2) + hggdpt(-3))/1600

New model

    d(log(egfet)) - egfet_aerr = y_egfet(1)
     + y_egfet(2)*log(.01*pegfr(-1)*pxp(-1)*egfet(-1)/xgdptn(-1))
     + y_egfet(3)*(hggdpt + hggdpt(-1) + hggdpt(-2) + hggdpt(-3))/1600

Old model

    log(pgfor) - pgfor_aerr - log(pgfor(-1)) = y_pgfor(1) + pipxnc/400
     + dpadj - d(log(pxp))

    log(pgfir) - pgfir_aerr - log(pgfir(-1)) = y_pgfir(1) + pipxnc/400
     + dpadj - d(log(pxp))

New model

    log(pegfr) - pegfr_aerr - log(pegfr(-1)) = pipxnc/400
     + dpadj - d(log(pxp))

## Some details about the changes and simplifications

- The consolidation of the federal spending equations has allowed the elimination of:
  - EGF: Federal government consumption and gross investment, cw 2009$
  - EGFN: Federal government consumption and gross investment, current $