BoE economists criticise DSGE inflation modelling
Team including MPC member Kristin Forbes criticises structural modelling approaches
Economists at the Bank of England have taken a fresh look at the factors driving inflation in the UK, finding some major economics models fail to capture the dynamics at play.
Monetary policy committee member Kristin Forbes and economists Lewis Kirkham and Konstantinos Theodoridis adopt a method that breaks time-series data into a slow-moving trend and deviations around this trend in a recent paper, A trendy approach to UK inflation dynamics.
They cast a sceptical eye over dynamic stochastic
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