1 Furthermore, it has been shown that these models work particularly well for short horizons, whereas structural macroeconometric models or DSGE models tend to perform well in the medium and long term. 2 This highlights that short-term models are not substitutes for traditional macroeconometric and DSGE models. However, they do add another piece of valuable information to the entire forecasting process.
To my mind, short-term models should therefore be regarded as complementary tools in the large “suite of models” used within central banks. 3  Uncertainty and risk in macroeconomic forecasts  While the central tendency of a forecast, the point forecast, generally receives most public attention, forecast uncertainty and forecast risks are two other important features in forecasting exercises.