The Centre of Policy Studies conducts biannual forecasts of the Australian economy using the MONASH model. The results from these forecasts are used both as input to the Centre's labour market forecasting program and as no-policy- change base-case forecasts in contract research projects. For the latest forecasting round, selected results (such as forecasts of output and employment by industry) can be obtained by emailing James Giesecke.
Details of the MONASH forecasting methodology can be obtained by downloading the model documentation from the MONASH model
webpage. In summary, the preparation of the forecasts can be viewed as occurring in two stages: an historical simulation, and a forecasting
simulation. In the historical simulation, the model is forced to track the detail of industry and commodity
outcomes over a period of recent history, as observable from ABS data. This allows the model to calculate the outcomes for sectoral variables
describing (typically unobservable) features of the economy's structure, such as industry production technologies and household tastes. The
results for these technology and taste variables in the historical simulation are then used to inform decisions for their forecast values. The
MONASH forecasting methodology also makes extensive use of independent forecasts from expert groups specialising in the analysis of different
aspects of the economy. These include: macroeconomic forecasts from Access Economics, Treasury and other macro analysts; ABARE commodity
forecasts; forecasts of tourist numbers from the Tourism Forecasting Council; and forecasts of tariff rates from the Productivity Commission. The
forecasts also take account of the effects of anticipated secular trends, such as the impact of population ageing on demands for health services.