Michigan model

The "Michigan model" refers to a specific type of macroeconometric model developed in the United States after World War II, building upon earlier work by L.R. Klein and A.S. Goldberger. Econometrics itself is the statistical and mathematical analysis of economic relationships, often used for forecasting and aiding in economic policy decisions by governments and businesses.1

Early econometric studies focused on quantifying relationships between variables like commodity prices and sales, or income and expenditure. Later developments led to macroeconomic model building, aiming to describe entire economies mathematically. The Michigan model, constructed on an annual basis, was an elaboration of these efforts and paved the way for more sophisticated models that analyze short-term economic movements and the lags between different economic variables.1