The role of models Modelling can play a useful role in the forecasting process, including by helping to identify the nature of the shocks affecting the economy. Models can also provide a sense of how the economy might respond to alternative policy paths or different assumptions about key variables, such as commodity prices or the exchange rate to name just two.
In addition, models allow us to check whether our forecasts are consistent. For example, does the path for output and employment imply a plausible path for productivity? And do they imply patterns of economic behaviour that are broadly in line with historical experience?