## NGDP Forecast Model Refresh – Taking the Forecast to “11”

We’ve recently overhauled our forecasting system. It was a good time to do this, as the recent GDP revisions could have altered the statistical relationships between NGDP and our market-derived factors. Updating the forecast system The starting point for our forecasting approach is to assume that Market Monetarism is true enough to be useful. We take it as given that a weak form Efficient Market’s hypothesis is in play, and that an important determinant of many traded financial market prices is the expected path of US nominal GDP. It is easy enough to point out that market prices assume certain… Read More