3. Short-Term Forecasting

Although assigned a range of tasks, Godley quickly gains a reputation for assembling data and preparing the one-year forecast, which has become a central Treasury function and the anchor of its other activities. His data analysis skills are the Launchpad for some life-changing intellectual alliances, especially with Cambridge economist Nicholas Kaldor (government chief tax adviser from 1964) and eminent statistician Claus Moser. Encountering many limitations to forecast preparation and exploring the statistical estimation techniques now being made easier to implement by mechanical calculators, Godley secures a one-year secondment in 1963–1964 to the National Institute of Economic and Social Research (NIESR). In an intensive burst of research, he co-authors empirical studies on price-setting, import demand and productivity trends, to help improve the short-term forecast, and works more closely with Kaldor on the Selective Employment Tax.