Forecasting

Economic forecasting is the backbone of our work, whether it be providing policy advice, undertaking research, or generating specific forecasts for clients. Our clients, both private and public sector, value the rigorous quantitative analysis that is behind the economic advice that we provide.

We regularly provide model based forecasts for specific sectors of the economy and in aggregate, focusing on output and employment growth, prices (including wages), interest rates, exchange rates, commodity prices, and stock market prices over both the short and longer term (and incorporating demographic trends). Many of these factors are of critical importance to business and strategic planning:

• macro/state/industry indicators (output, employment, wages and prices);
• financial market indicators (exchange and interest rates and stock market indexes and estimates of risk premiums and market volatility); and
• federal and state budget balances (including structural balances, measures of fiscal stimulus and analysis of public and private infrastructure spending).
  Our forecasts are anchored by our macroeconomic model of the Australian economy (ME-BARRIE).

Our approach to forecasting is personalised, focusing on each clients specific needs and taking the time to explain the forecasts and how they relate to the clients concerns.

Modelling

Economic modelling is at the centre of our work. Our modelling allows clients to:

• Understand the complex economic interactions that result from changes in policy or the business and economic environment.
• See the impact of change on the bottom line or outlook for their business or industry.
• Equip themselves with solid data and information needed to enter the economic or policy debate.
• Keep abreast of the key drivers that affect their business.
  Macroeconomics maintains proprietary in-house economic models, which are supplemented by specialised models tailor made individual client needs.

In-House Models

Macroeconomics Australian Macro Model (ME-BARRIE)

ME-BARRIE is a dynamic general equilibrium model of the Australian economy. It provides forecasts of the Australian economy, as well as industry and State forecasts over a twenty year period. The model contains forecasts of key economic variables such as GDP, employment, wages, exchange rates, and interest rates.

The ME-BARRIE is available for purchase on a tailored basis. It is provided in a user -friendly software package (operating through Microsoft Excel®). The full model is still under development but will be available for clients on a limited basis from July 2008.

For our regular forecasts and commentary on the economy see our Publications & Models page.

Macroeconomics Australian Budgets Model (ME-BUDGET)

ME-BUDGET is a Microsoft Excel® spreadsheet based model which projects the budget bottom-line for each Australian government over the period of the forward estimates and out 15 years. Essentially it allows you to estimate the budget position (revenue and expenses) of each Australian government based on our baseline assessment of for economic parameters and policy variations, and allows you to test the sensitivity of each budget position for changes in a wide selection of economic and policy parameters. The full model is available now to subscribers and we will update the model for economic and budget parameter on a rolling basis throughout the year.

For our regular forecasts and commentary on Australian budgets, please see our Publications & Models page.

Macroeconomics Australian Demographic Model (ME-DEMOGRAPHIC)

ME-DEMOGRAPHIC is a model containing detailed projections of Australia's population. Building up from the demographic ‘first principles' of births, deaths, migration and household by age and gender for each State and Territory formation, the model projects population. By changing the underlying assumptions in the model, custom population projections can be tailored to individual client needs. It is also provided in a user -friendly software package (operating through Microsoft Excel®). This model is under development and is due for completion by mid to late 2008.

Macroeconomics Australian Long Term Macro Model (ME-LONGTERM)

ME-LONGTERM is a long term of the Australian macro economy over 100 years and provides longer term projections of household living standards (measured through private consumption) and savings rates over time, supported by our projections for population by age and gender for each State and Territory (building on ME-DEMOGRAPHIC. By changing the underlying assumptions in the model regarding bequests it is possible to analyse the impact of changes in government policies on long term savings behavior and living standards. The model is capable of use in analysing the long term impact of various public policies relating to tax, health, education, productivity and climate change etc.

This model is still under development and is due for completion by the middle of 2009.

Purpose Built Models

Macroeconomics produces a wide variety of specialised economic models for clients. Some of these are based on our existing in-house models, and others are designed especially for the client. Specialised models are tailored specifically to the needs of the client, with the nature of the model dependent upon the complexity of the available data.

We aim to deliver models which are easily understood, flexible, user friendly and readily updated. We are happy to train our clients in the use of our software to assist you to model your own scenarios.

Our Forecasting & Modelling team produces two monthly paid publications (Australian Business Cycle and Macro Policy Bulletin and the Australian Finance Bulletin) and two quarterly paid publications (Australian Economic Outlook Bulletin and the Australian Construction Bulletin).

To obtain more information about Macroeconomics forecasting and modelling services or to arrange a demonstration of our models please email: office.manager@macroeconomics.com.au.