Economic Impact Forecasting
A control forecast, which uses current data regarding the economy, is generated by the REMI model. The control forecast represents the projection of the economy into the future ceteris paribus. This means that future economic growth will follow similar patterns in the future as had been experienced in the past.
The alternative forecast allows the user to input variable changes to occur in future time periods. Only those variables that would be affected by the policy change being measured would be changed in the alternative forecast. The REMI model then forecasts economic performance based upon the policy variable changes.
The difference between the alternative and the control forecasts, measured by the distance between the two forecast lines, represents the economic impact of the policy change upon the economy. If the alternative forecast is greater than the control forecast, then a positive economic impact results for the economy. A negative economic impact results should the alternative forecast be less than the control forecast.