graphLassie·5 lat temu·discussA bigger problem though is the feedback loop between the model and policy makers in this context.For instance, the model predicts 2023 GDP to decrease so we take all out measures to cause this to not happen.Was the model wrong? How would you know?In this context, the model would need to predict the actions by the Fed but the Fed would be the ones using the model.So you would also have to predict the Feds reaction to the prediction the model made of the Fed's reaction to the model..on and on.
For instance, the model predicts 2023 GDP to decrease so we take all out measures to cause this to not happen.
Was the model wrong? How would you know?
In this context, the model would need to predict the actions by the Fed but the Fed would be the ones using the model.
So you would also have to predict the Feds reaction to the prediction the model made of the Fed's reaction to the model..on and on.