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 1954:1-2001:3, and the current forecast period is 2001:4-2005:4.

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 macro economy 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 1.21 percentage points for the real GDP growth forecasts and 0.54 percentage points for the inflation forecasts (66 forecasts---the first one dated September 23, 1983). See The Forecasting Record of the US Model.

The MC Model
The multicountry (MC) model was developed in the early 1980s by Ray C. Fair, and the first complete description of it is in Fair (1984). The MC1 version of the model consists of estimated structural equations for 33 countries. There are also estimated trade share equations for 44 countries plus an "all other" category, labelled "AO". The trade share matrix is thus 45 x 45. The US model is part of the MC1 model. The non United States part of the MC1 model is called the "ROW" (rest of world) model. 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 2002:4. 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. For a general discussion of the size of the MC1 model, see Section 1.4 of The MC1 Model Workbook.

The MC2 Model
The MC2 model is the latest version of the MC model. It consists of more countries than does the MC1 version, and the forecast period now goes through 2003:4. There are estimated structural equations for 38 countries, and there are estimated trade share equations for 58 countries plus the "all other" category. See Section 1.4 of The MC2 Model Workbook for a discussion of the size of the model. One now has the option when working with the MC2 model of examining the predictions of the trade flow variables. If, for example, one wants to examine the prediction of the level of exports from Brazil to Italy, this can be done.