Forecast Performance in Times of Terrorism

Jonathan Benchimol and Makram El-Shagi

No 390, Globalization Institute Working Papers from Federal Reserve Bank of Dallas

Abstract: Governments, central banks and private companies make extensive use of expert and market-based forecasts in their decision-making processes. These forecasts can be affected by terrorism, a factor that should be considered by decision-makers. We focus on terrorism as a mostly endogenously driven form of political uncertainty and assess the forecasting performance of market-based and professional inflation and exchange rate forecasts in Israel. We show that expert forecasts are better than market-based forecasts, particularly during periods of terrorism. However, the performance of both market-based and expert forecasts is significantly worse during such periods. Thus, policymakers should be particularly attentive to terrorism when considering inflation and exchange rate forecasts.

Keywords: inflation; exchange rates; forecast performance; terrorism; market forecast; expert forecast (search for similar items in EconPapers)
JEL-codes: C53 E37 F37 F51 (search for similar items in EconPapers)
Pages: 39
Date: 2020-06-26
New Economics Papers: this item is included in nep-for and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.dallasfed.org/~/media/documents/institute/wpapers/2020/0390.pdf Full text (application/pdf)

Related works:
Journal Article: Forecast performance in times of terrorism (2020)
Working Paper: Forecast performance in times of terrorism (2020)
Working Paper: Forecast Performance in Times of Terrorism (2019)
Working Paper: Forecast Performance in Times of Terrorism (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:88258

DOI: 10.24149/gwp390

Access Statistics for this paper

More papers in Globalization Institute Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().