An Assessment of the IMF’s Unemployment Forecasts

Zidong An, Joao Jalles and Prakash Loungani

Manchester School, 2019, vol. 87, issue 4, 489-509

Abstract: This paper assesses the performance of the IMF’s unemployment forecasts for 84 countries, both advanced and emerging market economies, between 1990 and 2015. The forecasts are reported in the World Economic Outlook, a leading IMF publication. The forecasts display a small amount of bias—they tend to predict lower unemployment outcomes than occur—which arises because the forecasters fail to predict accurately the sharp increase in unemployment during downturns. Forecasts are characterized by inefficiency (errors of the past are repeated in the present) and rigidity (forecast revisions are serially correlated). There is little to choose between IMF and Consensus Forecasts, a source of private sector forecasts, for the small subset of 12 countries for which both sets of forecasts are available.

Date: 2019
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