Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/211806 
Year of Publication: 
1998
Series/Report no.: 
Bank of Finland Discussion Papers No. 5/1998
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This paper provides an answer to the question of how to improve the forecasting performance of a macro model to better account for economic developments and how to evaluate the forecasting uncertainty.The main tool in this assessment is stochastic simulation.Stochastic simulations in this paper involve both endogenous and exogenous variables.These simulations also allow us to assess the linearity of the model.Alternative dynamic simulations may, in turn, give some idea of the stability of the model.Finally, the forecasts may be improved by comparing the outcomes from the macro model and from a leading indicators' model. This kind of exercise is particularly useful in assessing the developments in the short run, in which case the macro models typically perform rather poorly.
Subjects: 
forecasting
macro models
simulation
Persistent Identifier of the first edition: 
ISBN: 
951-686-570-4
Document Type: 
Working Paper

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