The warning not to put all your eggs in one basket may apply to policymakers’ exclusive focus on boosting the demand side of economies. Monetary policies, in particular, are fixated on promoting growth in demand. But is the supply side of the equation being ignored in the process? Is this one-sided approach most likely to prosper the economies that are subjected to it, or is a change of focus needed?
Forecasting economic risk is an attempt to quantify the unknowable in a complex, ever-changing system. Although they often fall short of future realities, macroeconomic forecasting models that include thoughtful and comprehensive analyses of risk factors will provide launching points for serious and useful economic-policy discussion and planning.