In this 22-minute discussion, Smart Prosperity Institute economist Mike Moffatt and journalist Cara Stern talk to Scott Cameron, an economist formerly with the Parliamentary Budget Officer in Ottawa and now working in government in the Channel Islands.

This conversation explores economic forecasting models and the Bank of Canada's transition to a new model. The chapters cover the purpose of economic forecasting, the current method of capturing and measuring the Canadian economy, criticism of existing models, the importance of theory and data in economic modeling, the Bank of Canada's motivation for change and addressing model gaps, a comparison of the Canadian model with other countries, the influence of the Federal Reserve on Canadian monetary policy, accountability and decision-making in monetary policy, and the alignment of Canadian and US monetary policy.

Takeaways:
Economic forecasting models are essential for conducting monetary policy and determining the appropriate policy interest rate.
The Bank of Canada currently uses two models, one focused on empirical performance and the other on theoretical rigor.
There has been criticism of the existing models, particularly regarding their ability to accurately predict real-world economic behavior.
The Bank of Canada is transitioning to a new model that aims to blend theory and empirical performance.
The new model will address gaps in the previous models, such as the representation of the financial sector and the housing market.
The Bank of Canada's monetary policy is influenced by the Federal Reserve, and the two countries tend to move in the same direction.
The ultimate decision-making in monetary policy lies with the governing council, who consider a range of factors beyond the models.

Hosted by Mike Moffatt & Cara Stern & Sabrina Maddeaux

Produced by Meredith Martin

Funded by the Neptis Foundation https://neptis.org/