NZSIM generates the core forecasts for informing monetary policy decisions, and helps us identify the fundamental economic drivers and empirical relationships to explain the observed economic data. 17  The information collated over the forecast round is fed into NZSIM, and the theoretical structure of the model ensures that our forecasts are consistent.
For example, the national income accounting discipline is preserved, we can distinguish between domestic and imported inflation which sum up to CPI inflation, and we are able to trace the forces driving economic growth. During the monetary policy decision-making process, the NZSIM forecasts are crosschecked with other modelling, and where appropriate modified to take into account additional information not directly represented in the model.