Bank of England: Interpretable AI for Smarter Economic Predictions (Explained)

This episode breaks down a Bank of England research paper on using interpretable machine learning for economic forecasting. Discover how advanced AI models can outperform traditional methods by uncovering complex, time-varying relationships in data, specifically demonstrated through forecasting US unemployment. We explain how a new workflow makes these powerful predictions transparent and actionable for decision-makers. This episode explains a real academic paper in plain English for a general audience. Source paper: An interpretable machine learning workflow with an application to economic forecasting https://www.bankofengland.co.uk/-/media/boe/files/working-paper/2022/an-interpretable-machine-learning-workflow-with-an-application-to-economic-forecasting.pdf Keywords: economic forecasting, machine learning, interpretable AI, macroeconomics, central banking, unemployment