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The relevance of econometric models for medium- and longer-term forecasts and policy prescription (Inglês)

The use of highly aggregated, macroeconomic regression models for analyzing the economies of developing countries is evaluated. The need for long-term forecasting of various magnitudes in developing countries is well recognized. It is a common practice when making these forecasts to use econometric models that were originally developed for short-term forecasting of relationships in developing countries. Evaluation of the models requires consideration of the reliability of the data from which they are estimated, the significance of the coefficients of their equations, the functional form of their equations, their propensity to use certain statistical tests in a mechanical way, and their use for making forecasts for the future. One has the choice to either use the model with its associated and discredited equations and coefficients, or not to use it. However, there is no way to utilize one's recognition of the models' limitations. Thus, it is concluded that macroeconomic regressive models have little relevance for policy planning and long-term economic analysis. Statistical data are included.




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