20211109_LargeModelST
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Narrative based selection<br />
GDP growth (y-o-y) of individual scenario paths<br />
• Selecting the subset of scenarios<br />
corresponding with the narrative of a deep<br />
contraction in output in 2020, adversity<br />
triggered by aggregate demand and supply<br />
shocks<br />
• Weighting function on individual simulated<br />
scenarios operating on variables of interest<br />
(both exogenous incl. shocks, and<br />
endogenous)<br />
• Averaging economy-wide and bank-level<br />
results across the subset of these scenarios<br />
• The outcome remains consistent with<br />
historical evidence and takes account of<br />
uncertainty about factors not pinned down by<br />
the narrative<br />
17<br />
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