Economic theory and forecasting : lessons from the literature ∗

  title={Economic theory and forecasting : lessons from the literature ∗},
  author={R. Giacomini},
Does economic theory help in forecasting key macroeconomic variables? This article aims to provide some insight into the question by drawing lessons from the literature. The definition of "economic theory" includes a broad range of examples, such as accounting identities, disaggregation and spatial restrictions when forecasting aggregate variables, cointegration and forecasting with Dynamic Stochastic General Equilibrium (DSGE) models. We group the lessons into three themes. The first discusses… CONTINUE READING


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