The unreliability of well-established macroeconomic models at times of upheaval such as the COVID-19 pandemic point out the need for a new ‘probability’-based scenario approach to forecasting economic output in crises, says the Cambridge Centre for Risk Studies at Cambridge Judge Business School.
A year after the first UK lockdown, the Centre calls for an approach that reflects a spectrum of circumstances in which various economic forecasts representing different scenarios are assigned a probability weighting – based on historical precedent, expert judgement, secondary economic models or statistical analysis.