Constructing Hybrid Models for Macroeconomic Forecasting and Policy Evaluation

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This research project takes as its principal objective the development of a new class of macroeconomic models to be used in forecasting and in evaluating alternative fiscal and monetary policies. Each of these models will be built around an analytic framework that meets the high standards for theoretical rigor and internal consistency demanded by academic economists, but will remain detailed and flexible enough to be used in the forecasting and simulation exercises demanded by policymakers. By combining the power of models currently used by academics with the flexibility of models currently used by policymakers, the hybrids developed here will exploit the strengths of both types of existing macroeconomic models.