Open economy models less accurate than closed economy in forecasting domestic variables.
The article compares how well two economic models predict future trends in Australia. One model focuses on Australia alone, while the other considers how the global economy affects Australia. The study finds that the model focusing only on Australia makes more accurate predictions. This could be because the global model doesn't account for foreign factors properly and has more uncertainty in its estimates. Further research shows that a mix of these issues causes the global model to struggle in forecasting economic trends in Australia.