role and usefulness of models role of models models can be used as a tool. models average past...
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![Page 1: Role and Usefulness of Models Role of Models Models can be used as a tool. Models average past behavior. Models are consistent and systematic framework](https://reader036.vdocuments.us/reader036/viewer/2022082820/56649e915503460f94b961b4/html5/thumbnails/1.jpg)
Role and Usefulness
of Models
![Page 2: Role and Usefulness of Models Role of Models Models can be used as a tool. Models average past behavior. Models are consistent and systematic framework](https://reader036.vdocuments.us/reader036/viewer/2022082820/56649e915503460f94b961b4/html5/thumbnails/2.jpg)
Role of Models• Models can be used as a tool.• Models average past behavior.• Models are consistent and system
atic framework.• A Model forecast is based on assu
mptions.• Should be used with MPB’s judge
ment.
![Page 3: Role and Usefulness of Models Role of Models Models can be used as a tool. Models average past behavior. Models are consistent and systematic framework](https://reader036.vdocuments.us/reader036/viewer/2022082820/56649e915503460f94b961b4/html5/thumbnails/3.jpg)
Usefulness of Economic Models
• Help in forecasting macroeconomic picture.
• Assist in evaluating effects of policies and external factors on the economy.
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Models, Forecasts and Policy
Core model Assumptions Other model
ForecastMPB’s
judgementsOther issues and
policy judgements
Policy decisionPolicy
recommendation from the model
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Macroeconomic Model
Financial BlockExternal Block Real Sector Block
Public Sector Block
Sectoral Model
Core Model
Financial Programming Framework
Indicators
Policy Questions
Policy ConclusionPolicy Simulation & Forecasting
Reaction Function
Forecasting
Inflation Indicator
Output
Inflation
Inflation Targeting
Optimal Solution
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Model needs to be improved depending on:
๏New data become available.๏The opportunity in developing
and improving the model.๏Changes in the economic and
social environment.๏New research findings in
economics and new techniques in econometrics.