New forecasting model revolutionizes monetary policy decisions with predictive accuracy.
The article presents a forecasting model for the U.S. economy to help with monetary policy decisions. The model uses 16 variables chosen for their ability to predict key economic factors and their relevance to monetary policy. The researchers evaluated the model's accuracy with out-of-sample forecasts and used predictive densities and fan charts. They also showed how the model can analyze the effects of a monetary policy change on the economy.