Do Euro Area Forecasters (Still) Have Faith in Macroeconomic Building Blocks? – Expectation Formation when Economics is in Crisis

Ralf Fendel, Eliza M. Lis and Jan-Christoph Rülke ()

No 09-03, WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management

Abstract: We use the ECB's Survey of Professional Forecaster to show that euro area expectations are consistent with standard macroeconomic building blocks such as the Phillips curve, Okun's law, and the Taylor rule. Moreover, the paper finds that the financial and economic crisis of 2007-2009 did not change the expectation formation process as professional forecasters still adopt macroeconomic building blocks for their forecast. The scepticism that has recently been raised concerning macroeconomic building blocks has apparently not yet affected professional forecasts. On the contrary, we conclude that professional forecasters still have faith in macroeconomic building blocks.

Keywords: Macroeconomic Models; Forecasting; Euro Area (search for similar items in EconPapers)
JEL-codes: C32 F37 G15 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009-10
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Persistent link: https://EconPapers.repec.org/RePEc:whu:wpaper:09-03

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