How Long to Read Quantifying Macroeconomic Uncertainty in Norway
By Frida Bowe
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Description
This paper presents a framework for quantifying uncertainty around point forecasts for GDP, inflation and house prices in Norway. The framework combines quantile regressions using a broad set of uncertainty indicators with a skewed t-distribution, allowing for time-variation and asymmetry in the uncertainty forecasts. This approach helps provide deeper insights into the macroeconomic uncertainty surrounding forecasts than more traditional time-series models, where uncertainty is usually symmetric and with limited time-variation. Formal tests, such as the log score and the Continuous Ranked Probability Score (CRPS), show that using informative indicators tend to improve density forecasts, particularity in the medium run.
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