Empiricial investigation of forecast uncertainty with Monte Carlo simulation

In 2006, the Bank of Albania decided to abandon its Monetary Targeting regime in favour of Inflation Targeting one. Against this setting, the Bank of Albania focused its research and analytic efforts on the development of empirically-based models for forecasting inflation and, in addition, one macroeconomic model, MEAM (macro econometric model for Albania). This model aims to analyze different scenarios and shocks in the economy, thus enabling nonnaive forecast of main macroeconomic variables, based on current and expected developments.