 Communicating Uncertainty in Macroeconomic ForecastsStephen Millard () No 583, National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research Abstract: In this paper, I discuss some of the challenges associated with communicating uncertainty around forecasts, particularly important given the context of an uncertain world. I first assess how well NIESR's fan charts have captured the distribution of past forecast errors finding that they have some problems with this. I then examine different ways of constructing fan charts, seeing how different measures of uncertainty can be used to adjust the size of the fan in NIESR forecasts. I conclude that fan charts based on historical forecast errors remain a useful way of communicating the degree of uncertainty around a forecast and argue that the width of the fan can be adjusted based on survey measures of uncertainty to provide a realistic illustration of the potential magnitude of forecast errors. I also discuss how, in principle, the fan chart can be skewed to reflect the balance of risks but argue that there is no convincing way of calibrating such an adjustment. Keywords: Macroeconomic forecasting; Uncertainty; Fan charts (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesrd:583 Access Statistics for this paper More papers in National Institute of Economic and Social Research (NIESR) Discussion Papers from National Institute of Economic and Social Research 2 Dean Trench Street Smith Square London SW1P 3HE. Contact information at EDIRC. |
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