Using dead reckoning in economic projections

Economics is an inexact science, measurement of basic data is at best approximate, and most interesting relationships change relatively rapidly in developing countries. Key variables determining economic prospects are often impossible to include into models. Models and their mathematical algorithms however are deceptively precise, which often complicates the process of constructing and using economic projection models in developing countries.This paper will examine those macro models intended for operational policy purposes and how they are used. These models try to be analytically good and have sufficient plausibility to influence policy. Thus, a great deal of judgment is required in constructing, using, and interpreting projection models in developing countries: the “dead reckoning” element.