Fiscal Policy Rules in Practice



where P denotes the matrix of transition probabilities. This equation can be rearranged to

(I-P)p(S0|X) =0,

(4.12)


with I being a (k × k) identity matrix. We know that by construction the k probabilities in
the vector of p(S0∣X) add up to one. Thus, with ι = (1,..., 1)' we may express this fact in vector
notation as

ιp(So∣X ) = 1.

(4.13)


In matrix notation (4.12) and (4.13) can be rewritten as

I-P

ι


p(S0|X) =


(4.14)


≡M

We premultiply this expression by (M'M) 1M' and obtain for the initial probabilities

p(So∣X ) = (M 'M )-1M '

(4.15)


4.1.4 Generating the Parameters

After having generated S , we are now able to formulate the conditional density of the parameters,
which is generally given by

p(λj∣S,λ-j,X) ∖ L(X∣S,λ) ∙p(S∣λ) ∙p(λj),                        (4.16)

where λ-j denotes the set of all parameters except for λj .

17



More intriguing information

1. Knowledge and Learning in Complex Urban Renewal Projects; Towards a Process Design
2. Enterpreneurship and problems of specialists training in Ukraine
3. THE AUTONOMOUS SYSTEMS LABORATORY
4. THE DIGITAL DIVIDE: COMPUTER USE, BASIC SKILLS AND EMPLOYMENT
5. The WTO and the Cartagena Protocol: International Policy Coordination or Conflict?
6. The name is absent
7. The name is absent
8. Skills, Partnerships and Tenancy in Sri Lankan Rice Farms
9. Agricultural Policy as a Social Engineering Tool
10. The name is absent