EconPapers    
Economics at your fingertips  
 

The potential of a small model

Adam Elbourne (a.c.elbourne@cpb.nl) and Coen Teulings
Additional contact information
Adam Elbourne: CPB Netherlands Bureau for Economic Policy Analysis

No 193, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: This CPB Discussion Paper highlights potential uses of simple, small models where large traditional models are less flexible. (updated 22/12/2011). We run a number of experiments with a small two variable VAR model of GDP growth and unemployment with both quarterly and yearly data. We compare the forecasts of these simple models with the published forecasts of the CPB and we conclude that there is not much di erence. We then show how easy it is to evaluate the usefulness of a given variable for forecasting by extending the model to include world trade. Perfect knowledge of future world trade growth would help considerably but is obviously not available at the time the forecasts were made. The available world trade data doesn't improve the forecasts. Finally we also show how quick and exible measures of the output gap can be constructed.

JEL-codes: C0 E0 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-cba and nep-for
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.cpb.nl/sites/default/files/publicaties ... tial-small-model.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:193

Access Statistics for this paper

More papers in CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis Contact information at EDIRC.
Bibliographic data for series maintained by (info@cpb.nl).

 
Page updated 2025-03-19
Handle: RePEc:cpb:discus:193