Vulnerable Growth

Tobias Adrian, Nina Boyarchenko and Domenico Giannone

No 20180409, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Traditional GDP forecasts potentially present an overly optimistic (or pessimistic) view of the state of the economy: by focusing on the point estimate for the conditional mean of growth, such forecasts ignore risks around the central forecast. Yet, policymakers around the world increasingly focus on risks to the central forecast in policy debates. For example, in the United States the Federal Open Market Committee (FOMC) commonly discusses the balance of risks in the economy, with the relative prominence of this discussion fluctuating with the state of the economy. In a recent paper, we propose a method for constructing the full conditional distribution of GDP projected growth as a function of current economic and financial conditions. This blog post reviews some of the findings from that paper and the implications for macroeconomic theory and for policymakers.

Keywords: downside risk; entropy; quantile regressions (search for similar items in EconPapers)
JEL-codes: E01 E27 (search for similar items in EconPapers)
Date: 2018-04-09
New Economics Papers: this item is included in nep-fdg and nep-mac
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Citations: View citations in EconPapers (42)

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Related works:
Journal Article: Vulnerable Growth (2019)
Working Paper: Vulnerable Growth (2017)
Working Paper: Vulnerable Growth (2016)
Working Paper: Vulnerable growth (2016)
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