Zandi Blinder paper

There's be a lot of talk about the Zandi-Blinder paper on the effects of fiscal and monetary stimulus which was recently released. Basically they say that the government stimulus measures were very successful and prevented a depression 2 scenario with 16+% unemployment, continued negative GDP growth through 2011 and serious deflation. So here's the link http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf .

I don't have enough of a background in economic forecasting to really dissect the paper's conclusions but I'll point out that Zandi is not a liberal economist, and in fact was a McCain economic adviser. Also, as I understand they used pretty standard models to make their analysis and it is relatively consistent with related alalysis from the CBO.

But the main reason I read the paper wasn't for the stimulus analysis but because i was interested in exactly how the Moody's Analytics economic model works and that's touched on in Appendix B of the paper. It talks about inputs to the model such as credit spreads (TED, LIBOR etc), household cash flow, mortgage rates, treasury yields, Federal Reserve asset values, undewriting standards on lending, business cost of capital (corporate bond yields), labor supply (based on full employment level of labor), and other capital stack input factors, FOMC's inflation target and several other factors. This is covered starting on page 18 of the paper. If anyone knows more about the nitty gritty of how this model functions please add a comment.