Although in theory models should incorporate all available information at any given point in time, there is still a certain amount of judgement that must be used. So as policy-makers, we cannot devolve our responsibilities to the outcomes of the model. Much consideration has to be given to a thorough analysis of the risks to the outlook.
More generally, small, highly-globalised countries such as Ireland are inherently more volatile than larger economies: we can grow strongly for extended periods but are also especially vulnerable to negative shocks. For this reason, it is essential that the Central Bank is pro-active in the deployment of macroprudential policies that can improve resilience and mitigate the procyclical dynamics associated with excessive leverage.