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Blurred Crystal Ball: investigating the forecasting challenges after a great exogenous shock

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  • Marcelo A. T. Aragão

Abstract

An event like Covid-19 pandemic brings about a deadly human toll and mayhem to the economy. With such a great exogeneous shock, policy makers and forecasters alike face a set of challenges to keep on contributing to the economic response. Many distinguishing researchers came forward with their own assessments of the lasting macroeconomic impacts of the Covid-19 pandemic. Modestly, this paper attempts a different instance: investigating how a practitioner can cope with some pressing forecasting challenges while avoiding naive pitfalls. Without claiming any quantification, it experiments with usual US economy data sources and macroeconomic models to exemplify these challenges and their possible overcoming. Finally, it summarizes some empirical, pragmatical conclusions.

Suggested Citation

  • Marcelo A. T. Aragão, 2021. "Blurred Crystal Ball: investigating the forecasting challenges after a great exogenous shock," Working Papers Series 549, Central Bank of Brazil, Research Department.
    • Handle: RePEc:bcb:wpaper:549
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    File URL: https://www.bcb.gov.br/content/publicacoes/WorkingPaperSeries/wps549.pdf
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