Short term models
Economic variables such as inflation are often required on a monthly basis for example for budgetary purposes. The short term outlook of such variables can be projected much more accurately using short term data driven models, such as ARIMA and Theta type models, than using a full blown econometric model.
Ferra regularly employs short term projection models to construct a near term trajectory of key economic indicators. These projections are also typically used to calibrate the Ferra Econometric Model in the short term.
Ferra uses several short term projection models, with a hold out period employed to determine the historical accuracy of these different models. Based on this record, an optimal projection is constructed as a weighted average of the various models. Finally, the projection is calibrated manually based on recent developments.
More information regarding short term models can also be obtained in the Forecast section.