Each quarter the data base is updated, the model is reestimated, and a new forecast is made. The forecasts are not subjectively adjusted (no constant adjustments). The current estimation period is 1954:1-2008:3, and the current forecast period is 2008:4-2012:4.

The main strength of the US model is that it is probably the best approximation of the U.S. economy available. It has been extensively tested and analyzed, and unlike commercial models, it does not have to be subjectively adjusted to produce accurate forecasts. You can have more confidence using the model than using commercial models that the results are actually telling you something about how the macroeconomy works. Commercial models are not even consistently estimated, even though consistent techniques have been available for over 40 years, whereas the US model has been consistently estimated from its beginning. The past forecasting record of the model is updated each quarter, so the user always has a complete record of how the model has done. The four-quarter-ahead mean absolute error is currently 1.07 percentage points for the real GDP growth forecasts and 0.65 percentage points for the inflation forecasts (98 forecasts---the first one dated September 23, 1983). See The Forecasting Record of the US Model.

The MCA and MCB and MCC and MCD Models

The multicountry model was developed in the early 1980s by Ray Fair, and the first complete description of it is in Fair (1984). There are three versions of the multicountry model on this site. The "MCA" model is the exact model in Estimating How the Macroeconomy Works.. The "MCB" model is the one used for the results in "Policy Effects in the Post Boom U.S. Economy". The "MCC" model is the one used for the results in "Evaluating Inflation Targeting Using a Macroeconometric Model" and "A Comparison of Five Federal Reserve Chairmen: Was Greenspan the Best?". The "MCD" model is the latest version of the model on this site. The MCD model consists of estimated structural equations for 38 countries. There are also estimated trade share equations for 58 countries plus an "all other" category, labelled "AO". The trade share matrix is thus 59 x 59. The data for the non US countries begin in 1960. Some of the country models are annual rather than quarterly. The estimation periods vary from country to country, and the forecast period ends in 2012:4 for the MCD model. The estimation technique for all the countries is two stage least squares except when there are too few observations to make the technique practical, where ordinary least squares is used.