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The Macroeconomic Projections of the German Government: A Comparison to an Independent Forecasting Institution

Robert Lehmann (), Timo Wolllmershäuser, Timo Wollmershäuser () and Timo Wollmershäuser ()

No 7460, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper investigates the macroeconomic projections of the German government since the 1970s and compares it those of the Joint Economic Forecast, which is an in-dependent forecasting institution in Germany. Our results indicate that nominal GDP projections are upward biased for longer forecast horizons, which seems to be driven by a false assessment of the decline in Germany’s trend growth and a systematic failure to correctly anticipate recessions. We show that the German government also deviates from the projections of the Joint Economic Forecast, which in fact worsened the forecast accuracy. Finally, we find evidence that these deviations are driven by political motives.

Keywords: macroeconomic forecasting; forecast accuracy; independent forecasting; political economic biases (search for similar items in EconPapers)
JEL-codes: E30 E37 E39 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eec, nep-for and nep-mac
Date: 2019
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