A Textual Analysis of the Bank of England Growth Forecasts
Jacob T. Jones,
Tara Sinclair and
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Jacob T. Jones: The George Washington University
No 2018-005, Working Papers from The George Washington University, Department of Economics, Research Program on Forecasting
The Bank of England publishes a quarterly Inflation Report (IR) that provides numerical forecasts and text discussion of their assessment of the UK economy. Previous research has evaluated the quantitative forecasts included in the IR, but we focus on the qualitative discussion of output growth. We use a textual analysis procedure to convert the qualitative assessments made by the Bank into quantitative scores. We compare these scores to real-time output growth data as well as to the corresponding quantitative projections published by the Bank. We find that overall developments in the UK economy were accurately represented in the text of the IR. Although the Bank failed to forecast the onset of the Great Recession ahead of time, they did perceive underlying weakness in the economy prior to the downturn, which was more clearly communicated in the text than in the quantitative forecasts.
Keywords: Macroeconomic Forecast Evaluation; Qualitative Forecasting; Great Recession (search for similar items in EconPapers)
JEL-codes: C53 E37 E58 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-for, nep-mac and nep-mon
Date: 2018-11, Revised 2019-05
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Persistent link: https://EconPapers.repec.org/RePEc:gwc:wpaper:2018-005
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