Logit kernel is a discrete choice model that has both probit-like disturbances as well as an additive i.i.d. extreme value (or Gumbel) disturbance à la multinomial logit. The result is an intuitive, practical, and powerful model that combines the flexibility of probit with the tractability of logit. For this reason, logit kernel has been deemed the “model of the future” and is becoming extremel...

This paper examines the predictive content of several macroeconomic variables for the decisions of the Federal Open Market Committee (FOMC) to change its target for the Federal funds rate. To take the discrete nature of the target changes and their serial dependence into account we develop forecasting procedures that are based on dynamic extensions of a multinomial logit model. We …nd that the ...