Long-term macro-economic model and scenario development
Vivid Economics was commissioned by a major industrial firm to develop a macroeconomic framework within which its investment modelling could take place. Having evaluated leading modelling approaches and set out the theoretical underpinnings of macro economics, the team proposed key variables to be included in the model and showed how these variables had moved historically. These variables were linked to other variables relevant to the firm’s sector and placed into a detailed model structure for the firm’s modelling team to develop in house. Expert interviews were employed to explore issues not well covered in published literature and uncertainty was qualitatively described through the help of a Delphi exercise. The approach was tested with a case study on specific markets in the energy sector.