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Why are survey forecasts superior to model forecasts?

Michael Clements

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We investigate two characteristics of survey forecasts that are shown to contribute to their superiority over purely model-based forecasts. These are that the consensus forecasts incorporate the effects of perceived changes in the long-run outlook, as well as embodying departures from the path toward the long-run expectation. Both characteristics on average tend to enhance forecast accuracy. At the level of the individual forecasts, there is scant evidence that the second characteristic enhances forecast accuracy, and the average accuracy of the individualforecasts can be improved by applying a mechanical correction. Keywords: consensus forecast, model-based forecasts, long-run expectations.

Keywords: consensus forecast; model-based forecasts; long-run expectations JEL Classification: C53; E37 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-for and nep-mac
Date: 2010
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