Forecasters look to complexity for better results
Central banks are developing models with production networks, non-linearities and heterogeneity
Central banks are adopting more complex modelling frameworks as they seek to correct blind spots revealed by recent crises.
Several economic modelling experts appeared at the Central Banking Meetings London on a panel that discussed next-generation forecasting tools. The three speakers, from institutions in the Americas and Europe, all said they were making their modelling frameworks more detailed. This involved relying on combinations of many small models to capture non-linear interactions and
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