Under the Hood – NGDP Sub model forecasts

Our NGDP forecast, more precisely, our estimate of the markets NGDP forecast, is not the result of a single model. As is more and more common, we keep a ‘stable’ of top models, and average the forecasts from them. The idea is that, once we narrow the basket down to only models that performed well in the past, it becomes hard to say which model is best, so we consider them all. Our current forecast of about 4% nominal growth over the next year results from averaging forecasts across five models. The basic picture—ignoring the details—is that Model 3 and…

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