A statistical evaluation of gap’s forecasting performance for the Albanian economy

A statistical evaluation of gap’s forecasting performance for the Albanian economy
Author: Meri Papavangjeli, Arlind Rama
Printed on: 21.03.2018
Production date: 21.03.2018
Material category : Not Periodic Publications / Working Papers

This paper aims at offering a statistical evaluation methodology on the forecasting performance of the GAP model, a semi-structural economic model used to support monetary policy decisions at the Bank of Albania since 2011. In this paper we evaluate the forecasts produced purely by the model, and not those used by the Monetary Policy Department, which also include the expert judgment and are not made public. The analytical approach used in the discussion material combines a statistical diagnostic look-up consisting in statistical measurements as RMSE and BIAS important to understand the forecasting performance of the model as an instrument in one, two and three years ahead time horizons.