Continuities and Discontinuities in Economic Forecasting
No 2019-003, Working Papers from The George Washington University, Department of Economics, Research Program on Forecasting
Throughout the history of macroeconomic forecasting, several major themes have remained surprisingly consistent. The failure to forecast economic downturns ahead of time is perhaps the most significant of these. Forecasting approaches have changed, but forecasts for recessions have not improved. What can we learn from past evaluations of macroeconomic forecasts? Is it possible to predict major economic shocks or is it a fool’s errand? This chapter discusses how forecasting techniques have evolved over time and yet the record on forecasting recessions remains dismal. There are several competing hypotheses for why forecasters fail to foresee recessions, but little evidence any of them are going to be addressed before the next recession occurs. This suggests planners and policymakers should expect to be surprised by the arrival of downturns and develop ways to be prepared for recessions without having clear warning of their coming.
Keywords: Forecast evaluation; recessions (search for similar items in EconPapers)
JEL-codes: E37 C53 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm, nep-for, nep-hpe and nep-mac
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