A primer on macroeconomic forcasting and policy evaluation models

Abstract

This paper is prompted by renewed interests in the development of a regional forecasting and policy evaluation model at the Economic Commission for Africa (ECA). It highlights the various phases of model-building, offers a critical assessment of the principal approaches to macroeconometnc forecasting and policy evaluation in the literature, and discusses important issues that should be taken into account in the design and development of a macroeconomic model for Africa. Finally, it presents two plausible theoretical frameworks that could serve as the initial basis for policy evaluation and forecasting exercises at ECA.