Macroeconomic modelling

Understanding the state of the economy and the probable path it will take in the future is crucial for appropriate planning, risk management and decision making. Developments in aggregate demand, prices and the labour market will affect revenues and have implications for costs and personnel in a company. In order to make sense of current macroeconomic data and produce reliable forecasts one needs to go beyond purely descriptive analysis and rely on a solid modelling framework. This will help to establish the size and magnitude of the relationships between macroeconomic variables, ensure consistency in projected developments and enable the creation of different scenarios to capture uncertainty about the future. Depending on the task at hand – analysis of past developments, forecasting or simulation – different macroeconomic modelling approaches will be called for. In any case, the use of an appropriate model will provide a sound basis for the analysis and boost the consistency of the obtained conclusions.