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The programme begins with an extract from the Chancellor's budget speech and poses the question of how the Treasury forecasts economic trends. Since 1975 the Treasury's economic model has been avai...lable to the public. Presenter Paul Roth uses a simplified flow chart of the model to explain the major variables it takes into account - both exogenous variables like government spending and endogenous ones like consumption. He goes on to demonstrate why forecasting is so uncertain, using the facilities of Scicon Computer Services, where the Treasury computer model is stored, to show how the assumptions fed into the computer affect its predictions. "The programme includes an extract from a sound interview with Joel Barnett and interviews with Joe Haines and a former Treasury advisor extracted from a 1976 'Panorama' documentary on economic forecasting. It ends with a filmed meeting of the ITEM Club, where computer forecasts are debated by businessmen who use them.
Metadata describing this Open University video programme
Module code and title: D284, National income and economic policy
Item code: D284; 06
First transmission date: 15-08-1979
Published: 1979
Rights Statement:
Restrictions on use:
Duration: 00:24:30
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Producer: Susan Boyd-Bowman
Presenter: Paul Roth
Contributors: Denis Healey; D.J. (Donald John) MacDougall; Nigel Morgan; Brian Reading; Joel Barnett; Joe Haines; Paul Roth
Publisher: BBC Open University
Keyword(s): Forecasting models; Keynesianism; Macro economics
Footage description: The programme begins with Mr Healey's budget speech of 1978. Paul Roth describes the governments need for economic forecasting and how the Treasury model was made available to the public in 1975. Paul Roth now examines the Treasury forecasting model in more detail. Working from a flow chart which explains the main relationships in the model he describes its strengths and weaknesses. At the offices of Scicon Computers Paul Roth, with the aid of Nigel Morgan, runs two forecasts for the economy. The first assumes that the government's pay policy will continue to be viable. The second plots future growth in the economy if the pay policy is a failure. The two potential growth rates are compared. Joel Barnett, Chief Secretary to the Treasury, describes some of the assumptions which have to be made in the model. Sir Donald MacDougall, former economic advisor at the treasury, explains that the decisions made about the residuals in the model tend to be a matter of personal judgement. In order to understand how forecasters agree upon a common set of assumptions for the model the programme follows a meeting of members of ITEM club, a group which use the treasury model for economic forecasting. At the meeting the members discuss the model and its predictions about levels of wage increases in the coming months. For various reasons these predictions are questioned and challenged in order that the forecast may be altered. Paul Roth explains that gradual adjustments to successive computer runs lead up to the final forecast. Sir Donald MacDougall argues that as forecasting has been shown to be more efficient than chance assessments, it will continue to be used, despite any deficiencies it has as a technique.
Master spool number: 6HT/73143
Production number: FOUD034W
Videofinder number: 158
Available to public: no