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Narrative forecasting

Traditional forecasting approaches have failed. We need a new simpler but much more powerful approach.

Traditional approaches to looking at the long-term economic outlook have failed miserably. Complex quantitative models simply don't cut the mustard. What's needed is a new approach which focuses on the most important drivers and the feedbacks and inter-relationships between them. This simply cannot be captured by a quantitative model. In contrast, macronomics argues that the best approach would be to engage in very wide and deep reading on the underlying drivers. This approach emphasises how the story is more important than the numbers, and that instead of solving equations the emphasis should be on solving a puzzle by fitting all the various pieces together. If you follow this approach the future outlook appears very different to the conventional wisdom. This is narrative forecasting.