Press release - Working Paper 153

Forecast with judgment and models

This paper proposes a simple and model-consistent method for combining forecasts generated by structural micro founded models and judgmental forecasts. The method also enables the judgmental forecasts to be interpreted through the lens of the model. We illustrate the proposed methodology with a real-time forecasting exercise, using a simple neo Keynesian dynamic stochastic general equilibrium model and prediction from the Survey of Professional Forecasters.