A few years ago, staff developed an additional methodology called the integrated framework (IF), which explicitly accounts for more long-term structural changes in the economy; notably, capital formation and population aging. The IF, though, is limited in that one of its key inputs is the level of the country’s capital stock, which makes its projections sensitive to short-term fluctuations in investment.
To further validate our estimates, we recently adapted and employed two more models: the basic multivariate filter (BMVF), proposed by Blagrave et al. in 2015, and the multivariate state-space framework (MSSF). The latter is an enhanced version of the BMVF that is sufficiently flexible to incorporate a range of assumptions about economic relationships.