Imagine going from having a book club with your co-workers to seeing them only on a Signal chat where every member has to be vetted – and the main conversation topic is when you might lose your job.

That’s what it was like for workers at one federal agency earlier this year.

koldo_studio/ShutterstockThe UK’s autumn budget tried to appeal to both workers and employers. But the decision the very next day to soften a key plan to improve workers’ rights shows how difficult that balance has become.

Using a novel macro-finance model we infer jointly the equilibrium real interest rate r*, trend inflation, interest rate expectations, and bond risk premia for the United States. In the model r* plays a dual macro-finance role: as the benchmark real interest rate that closes the output gap and as the time-varying long-run real interest rate that determines the level of the yield curve. Our estimated r* declines over the last decade, with estimation uncertainty being relatively contained. We show that both macro and financial information is important to infer r*.

This report provides a comprehensive overview of the models and tools used for macroeconomic projections within the European System of Central Banks (ESCB). These include semi-structural models, dynamic stochastic general equilibrium (DSGE) models, time series models and specialised satellite models tailored to particular questions or country-specific aspects. Each type of model has its own strengths and weaknesses and can help answer different questions. The models should therefore be seen as complementary rather than mutually exclusive.