However, in incorporating the effects of such factors as energy costs, import prices, and productivity into the model's wageprice block, the staff found it necessary to sacrifice some theoretical niceties in order to get close to the predictive accuracy provided by reduced-form models.
Perhaps future researchers will be able to resolve this tension in some clever way, but some tradeoff between purity of design and forecasting accuracy probably will always be unavoidable. In addition, the staff's experience with FRB/US illustrates some of the problems inherent in using real-time wage data.