Model invariance and constancy in the face of large shocks to the Norwegian macroeconomic system (Maintenance)

Economic models used for forecasting and to aid policy decisions have been estimated by the use of data from before the Covid-19 pandemic and the ensuing lockdowns, drop in economic activity and surge in unemployment. An important question for model developers and users is therefore how the empirical relationships that represented normal behavior of firms and households before Covid-19 have been affected by the pandemic and by the policy responses.

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The aim of the project is to close this knowledge gap. Another goal is to contribute to the development of methods that may mitigate the consequences of such effects for model based forecasting and for policy analysis during future pandemics and other disruptions to the economy. This will include development of methods for early detection of breaks in relationships, which may cut down the time-delay before the implications for policy can be analyzed. This may be of importance for economic performance during a future crisis.