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Forecasting the Effects of Policy Choices

What happens when a central bank makes a permanent change in its inflation target or a government modifies its objective for budgetary balance? Without tools and methods for statistical analysis of data, such as forecasting economic indicators, governments and central banks would be shooting in the dark when they make such important policy decisions.

Dr. Morten Nielsen, Canada Research Chair in Time Series Econometrics, is focusing on econometrics—the development of methods for the statistical analysis of data. While his work is highly technical, it has applications for a variety of practical problems in economics, finance, and the social sciences.

Nielsen’s work on vector autoregressive models (statistical models for multiple time series that are relied on almost universally by analysts) is particularly promising for macroeconomic forecasting and models used in policy analysis. Thus, Nielsen’s research could have far-reaching impacts on governments and central banks that rely heavily on such models to guide policy actions and evaluate past choices.