Hi everyone, I’ve done some studying for the CFA I, but I must admit I’m still shaky on macroeconomics. Lately, I’ve seen some forecasts about how long it will take for housing prices to recover, and also what the likelihood of a recession is. Anyone know of any specific economic models/formulas for this sort of thing? Predictions are all well and good (sometimes, anyway), but I was hoping for something that involved more math and less gut instinct. A reference that provided enough detail that I could reproduce the results would be ideal, but I’ll take what I can get. Thanks in advance for any help!
Economists use econometric models to make forecasts on variables such as GDP growth, housing prices, and unemployment rate. Many independent variables are employed to arrive at an estimate of the dependent variable. These models are 1% math and 99% gut instinct/logic. You ever hear the saying that economists do not control the economy anymore than weathermen control the weather? “how long it will take for housing prices to recover” - well the NAR (National Association of Realtors) have now revised their house price outlook in each of the past 14 months! Does that answer your question?
To definitively answer your question: The U.S. housing market will recover on July 2, 2011. The hard math: 1.2/.99925 + 2.3^1.00001 = 3.546622 I rounded down instead of up (my gut says to do that) 3.54 years from now is July 2, 2011 If you don’t believe me just bookmark this post (CTRL-D) and check back in 4 years.
>Economists use econometric models to make forecasts on variables such as GDP growth, >housing prices, and unemployment rate. Many independent variables are employed to arrive >at an estimate of the dependent variable. I agree, but I was hoping for some specifics. Anyway, I recently joined the econometric society in the hopes of improving my understanding of macroeconomics. I believe Ben Bernanke is (was?) one of their members. Hm… I wonder if they have a forum as well… Oh well, thanks anyway.
multi-variate regression analysis