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Short and long-term forecasting by the Netherlands Bureau for Economic Policy Analysis (CPB): science, witchcraft, or practical tool for policy?

Frits Bos () and C. N. Teulings ()

MPRA Paper from University Library of Munich, Germany

Abstract: This paper discusses five different types of forecasts by CPB: forecasts for next year, forecasts for next period of government, analyses of the sustainability of public finance, long-term scenarios and long-term effects of election platforms. CPB forecasts for next year and for the next period of government should be seen as well-motivated estimates based on all recent information, plausible assumptions and expected trends. The more distant the look into the future, the more uncertain are the forecasts. For such long-term analyses, the CPB employs scenarios, extended sensitivity analyses and identification of major political choices. Policy making is like sailing in fog. The regular set of CPB forecasts helps to look forward and to monitor whether a change of course is necessary. Despite fundamental uncertainty about the future, the CPB forecasts provide a good base for political discussions and decision making, like a coalition agreement, budget and wage rate negotiations and defining a long-term policy strategy. These forecasts inform Dutch society, reduce transaction costs in economic and political decision making, and foster consensus on economic and fiscal policy.

Keywords: macroeconomic forecasting and government policy; accuracy of forecasts; uncertainty and public decision making; measurement in economics; CPB Netherlands Bureau for Economic Policy Analysis (search for similar items in EconPapers)
JEL-codes: A11 C0 D8 E17 F17 F47 G17 H68 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-for and nep-mac
Date: 2013
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Published in OECD Journal on Budgeting 2013.1(2013): pp. 45-56

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