ABSTRACT
Introduction The problem of linkage between aggregate macroeconomic models and models of different sectors of the economy is a serious one which until this book has hardly been addressed in the literature. Nevertheless, it has been a fairly common practice to use a macro model to provide estimates and forecasts of national economic aggregates, then to divide these up by one means or another to give disaggregated results. An example in the UK is the Department of Trade and Industry's Disaggregated Industrial System, which relies on the Treasury Model to provide the necessary aggregates. Yet little is known of the implications of such linkage for simulation or forecasting and little has been done on the comparison of different methods of linkage on forecasting performance. This chapter is intended to contribute some evidence on these implications and methods.
