Macroeconomic Model Comparisons and Forecast Competition
|Publication:||Policy Letter No. 03, 2012|
|Topic Area:||Macro Finance|
|Keywords:||macroeconomic models, financial models, forecasting|
This contribution draws on two recent publications in which the macroeconomic model data base (www.macromodelbase.com) is employed for model comparisons. The comparative approach is used to base policy analysis on a systematic evaluation of the different implications that a certain economic policy can have when submitted to different modeling approaches. In this manner, policy recommendations are more robust to modeling uncertainty. By extending the comparative approach to forecasting, the authors investigate the accuracy of different forecasting models and obtain more reliable mean forecasts.
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