BoE economists criticise DSGE inflation modelling

Kristin Forbes leaves the MPC at the end of June
Bank of England

Economists at the Bank of England have taken a fresh look at the factors driving inflation in the UK, finding some major economics models fail to capture the dynamics at play.

Monetary policy committee member Kristin Forbes and economists Lewis Kirkham and Konstantinos Theodoridis adopt a method that breaks time-series data into a slow-moving trend and deviations around this trend in a recent paper, A trendy approach to UK inflation dynamics.

They cast a sceptical eye over dynamic stochastic

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