The Econotron Model is not a classic econometric model. A more appropriate name would be VARLIMAX-model. VARLIMAX is an acronym. It stands for:
A vector of variables is used as input and output.
AR: Auto Regressive
Delayed values of the endogenuous variabels are used to forecast variables.
LI: Leading Index
This is the most important feature of the model. Composite leading indices are used to make forecasts. We found that the use of a composite leading index of a country can only modestly forecast the future course of events in that country. Composite leading indices of countries it exports to are also (if not more) relevant. The model takes this into account by using tradesharematrices. The composite leading indices of countries any given country exports to are weighted according to their share in exports of that given country. This procedure augments the predictve accuracy of the model significantly.
MA: Moving Average
Delayed values of error terms are added in order to assess the impact of variables that are not a part of the model.
Other relevant economic variables are used to make forecasts based on economic theory. These variables are only added if there is a good reason to do so.