# Imports excluding Petroleum (EMO and PMO)

## Changes to the FRB/US model

EMO: Imports of goods and services ex. petroleum, cw 2009$
Old model

    dlog(emo) - emo_aerr =
    y_emo(1)
     + y_emo(2)*log(emo(-1)*(pmo(-1)/100)/(uemot(-1)*xgden(-1)))
     + y_emo(3)*(xgap2 - xgap2(-1))/100
     + y_emo(4)*(xgap2(-1) - xgap2(-2))/100
     + y_emo(5)*log(ddockm)
     + y_emo(6)*dlog(ddockm)

New model

    dlog(emo) - emo_aerr =
    y_emo(1)
     + y_emo(2)*log(emo(-1)*(pmo(-1)/100)/(uemot(-1)*xgdpn(-1)))
     + y_emo(3)*(xgap2 - xgap2(-1))/100
     + y_emo(4)*(xgap2(-1) - xgap2(-2))/100
     + y_emo(5)*log(ddockm)
     + y_emo(6)*dlog(ddockm)

PMO: Price index for imports ex. petroleum, cw
Old model

    dlog(pmo) - pmo_aerr =
    y_pmo(1)
     + y_pmo(2)*(log(qpmo) + .64*log(fpcm(-1)/fpxm(-1))
     + .36*log(pxb(-1)) - log(pmo(-1)))
     + y_pmo(3)*dlog(fpcm/fpxm)
     + y_pmo(4)*dlog(pxb)

New model

    dlog(pmo) - pmo_aerr =
    y_pmo(1)
     + y_pmo(2)*(log(qpmo) + .64*log(fpc(-1)/fpx(-1)) + .36*log(pxb(-1)) - log(pmo(-1)))
     + y_pmo(3)*dlog(fpc/fpx) + (1
     - y_pmo(3))*dlog(pxb)

## Details about the simplifications

- The replacement of variables particular to these equations by very similar but far more common series is the main revision to the EMO and PMO equations.
  - Some of these peculiar variables were nothing more than their broader counterparts up to an exogenous multiplicative factor, which added little to the dynamics of the model and our economic understanding, e.g. FPCM is the product of the multiplicative factor UFPCM and FPC.
- The variables that were replaced (eliminated) are:
  - XGDE: Domestic absorption, cw
  - XGDEN: Nominal Absorption, current $
  - FPCM: Foreign aggregate consumer price (G39, bilateral non-oil import trade weights)
  - FPXM: Nominal exchange rate (G39, bilateral import trade weights)