Bank’s macro model takes a bruising
Faults in the Bank of England's macro model have led to it consistently misjudging the trade-off between growth and inflation, a former Bank economist has said.
Erik Britton, a director at Fathom, a consultancy, and a former Bank economist, on Tuesday flagged that the level of GDP was now 7% lower than the Bank had assumed in its August 2008 Inflation Report while inflation was now 1.2% higher than forecast.
This, he said, was down to flaws in the Bank's quarterly forecasting model, Beqm, which
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