THE HISTORICAL TRACKING PERFORMANCE OF UK MACROECONOMETRIC MODELS 1978-85

This paper analyses the historical tracking performance of six models of the UK economy over the period 1978-1985. Methodological issues are addressed: it is argued that static simulation is the appropriate mode of analysis, and generalizations for model consistent forward expectations variables are developed. The results are disappointing, with Theil inequality coefficient exceeding one in more than half the cases tabulated. Cross-model encompassing tests in general suggest that no single model dominates; each model has its own deficiencies. A historical tracking solution may be used as a base for counterfactual exercises, and possible adjustments for this purpose are discussed. © 1990.