Forecasting:

Murphy Model 2 (MM2)

Econtech’s forecasting tool, Murphy Model 2 (MM2), is Australia's leading national, industry and state forecasting model. It has a highly respected forecasting track record and its forecasts are used by Federal and State Governments, industry associations, financial institutions and major companies. The forecasting reports are available from Econtech.

Development

The original Murphy Model was developed by Chris Murphy, after ten years of experience in macroeconometric modelling at the Australian Treasury, Economic Planning Advisory Council, and the Australian National University. In 1988, Chris published the first version of the Murphy Model in Australian Economic Papers, and it was soon recognised as Australia’s leading national or macro model.

In 1994, the first major redevelopment of the model was undertaken to distinguish 12 industry sectors. This marked the introduction of the Murphy Model 2 (MM2), a fully integrated macro and industry model.

In 1995, under contract to two state treasuries, the MM2-States was developed as an extension to MM2. The MM2-States allocates a number of MM2’s key outputs across the eight Australian States and Territories.

In the same year, the current version of MM2-Demographic was developed under contract to the Australian Bureau of Immigration Research. Using assumptions for fertility, mortality, overseas and interstate migration, it generates consistent state and national population scenarios.

In 1996, the MM2 was further developed to expand the sectoral detail from 12 sectors to the 18 sectors corresponding to the Australian and New Zealand Standard Industrial Classification (ANZSIC) industry divisions.

The MM2 suite of Models, comprising MM2, MM2-Demographic and MM2-States, is exclusive to Econtech.

Features

MM2 is a state-of-the-art, fully-integrated macro-industry model.

  • produces quarter-by-quarter nine-year-ahead forecasts
  • forward-looking financial sector for realism
  • Keynesian short-run for forecasting
  • neoclassical long-run for policy analysis

Documentation

Powell, A.A. and Murphy, C.W. (1997), Inside a Modern Macroeconometric Model - A Guide to the Murphy Model, Springer, Berlin, 2nd ed., 455pp.

MM2 Forecasting Services

The MM2 suite of models is used every quarter to produce comprehensive and up-to-date economic forecasts at the national, industry and state levels. The national, industry and state forecasts are available in our forecasting report.

For more information, email Dinar Prihardini or phone her on (02) 6295 0527.

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