Economists rely on Vector Autoregression (VAR) models to forecast macroeconomic time series that may infer the effects of structural shocks and estimate unobservable cyclical components of macroeconomic aggregates. A VAR model is made up of a system of equations that represents the relationships between multiple variables. For example, variables such as unemployment, interest, and inflation rates may be incorporated into a VAR model. Theories have been developed that claim to improve model misspecification, thereby avoiding inaccuracies.Francesca, Loria, et al. “Economic theories and...