A textual analysis of Bank of England growth forecasts

Jacob T. Jones, Tara Sinclair and Herman Stekler

International Journal of Forecasting, 2020, vol. 36, issue 4, 1478-1487

Abstract: The Bank of England publishes a quarterly Inflation Report that provides numerical forecasts and a text discussion of its assessment of the UK economy. Previous research has evaluated the quantitative forecasts that are included in these reports, but we focus on the qualitative discussion of output growth, by using an in-sample textual analysis procedure to convert these qualitative assessments into a score for each report over the period 2005–2014. We also construct out-of-sample scores for reports before and after this period. We then compare the scores both to real-time output growth data and to the corresponding quantitative projections published by the bank. We find that overall developments in the UK economy were represented accurately in the text of the Inflation Report. Furthermore, efficiency regressions suggest that there is information in the text that could improve the Bank of England’s quantitative nowcasts and one-quarter-ahead forecasts.

Keywords: Forecast evaluation; Qualitative forecasting; Great Recession; GDP forecasts; Inflation Report (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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Working Paper: A Textual Analysis of the Bank of England Growth Forecasts (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfor:v:36:y:2020:i:4:p:1478-1487

DOI: 10.1016/j.ijforecast.2019.05.015

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