Forecasting Model for the UK Economy
The forecaster is still under construction. It is based upon a three-equation model which explains each of 
u, 2y and 2p, where u, y and p represent respectively the log unemployment rate, log real GDP at factor cost, and the log of the retail price index (1985=100).
The explanatory variables in the case of each equation include some subset of the following: a constant, u-1, y-1, p-1, fiscal stance, and level and change terms in the interest rate on T-bills.
Fiscal stance is measured by the residual from a regression of f on y-1 and f-1 where f is the difference between the government spending to GDP ratio and the tax revenues to GDP ratio; this measure is used in order to cleanse the fiscal stance measure of cyclical effects.
During this construction phase, you should examine the Javascript to establish the precise specification of the model. I aim to write something more accessible about it on this page in due course.
Parameters were estimated using OLS on data from 1973-96.
This is a very simple model designed for pedagogical purposes. While it serves this purpose reasonably well, the program comes without any guarantees concerning forecast accuracy (or about anything else for that matter!). It is here mainly because, at the time of writing, there were (as far as I could tell) no similar models for the UK available on the web. If it inspires anyone to produce something better, then it will have served one of its purposes. Please feel free to link, mirror, or develop this; if you do so, please acknowledge the source of the original and let me know!
