Economic and research departments at central banks aim to incorporate the latest academic developments in forecasting methods into their forecasting practice – provided they turn out to be an improvement on the existing procedures. Against this backdrop, I would like to discuss some of the developments that have lately been of interest in the Eurosystem and at the Bundesbank.
First, I will touch on recent developments in short-term forecasting and then elaborate on the uncertainty and risk of macroeconomic forecasts. 2  Recent progress in short-term forecasting  To enhance policy effectiveness, the Eurosystem has spent a lot of resources on developing forecast methods and models and, as a result, we have seen substantial progress in recent years.