Problem
The dictator of a Caribbean island wants you to predict the effect on inflation in his country of the introduction of controls on money supply. Unfortunately, he has read an elementary forecasting book and suggests that you use either the method of leading indicators or Box-Jenkins ARIMA modeling. How would you try to persuade him that these techniques are inappropriate but that a small econometric model would probably do a better job. Discuss how this econometric model would actually be used to suggest an appropriate control policy for money.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.