Forecast Uncertainties in Macroeconometric Models: An Application to the UK Economy

This paper argues that probability forecasts convey information on the uncertainties that surround macro-economic forecasts in a manner which is straightforward and which is preferable to other alternatives, including the use of confidence intervals. Probability forecasts relating to UK output growth and inflation, obtained using a small macro- econometric model, are presented. We discuss in detail the probability that inflation will fall within the Bank of England’s target range and that recession will be avoided, both as separate single events and jointly. The probability forecasts are also used to provide insights on the interrelatedness of output growth and inflation outcomes at different horizons.Probability Forecasting; Long Run Structural VARs; Macroeconomic Modelling, Probability Forecasts of Inflation; Interest Rates and Output Growth

The J-curve dynamics of Turkey: an application of ARDL model

This article seeks an empirical evidence for the existence of the J-curve phenomenon both in the short-run and long-run for Turkey over the period 1980-2005. The bounds testing cointegration approach is employed to estimate the trade balance model. An augmented form of Granger causality analysis is implemented between trade balance, real effective exchange rates, foreign income and domestic income. The stability of the short-run as well as long-run coefficients in the trade balance model is tested too. The empirical results that the J-curve phenomenon is supported only in the short-run. Whilst causality tests reveal mix results, the parameter stability tests seem to be inconclusive.