NGDP Forecast Update: What has driven it higher?

The NGDP forecast climbed higher, to a little over 4%. To get a sense of why the forecast has moved higher through August, we can start by looking at the sub-models. When we look at the sub-model forecasts, patterns emerge. Firstly, all the models are up a little, indicating the main direction of markets has moved in a way consistent with higher NGDP. Further, Models 2 and 4 have increased a good amount. It turns out these two share a data matrix. This dataset is unique in that it contains two principal component scores, whereas the other models make use…

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