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Journal Article
Why do forecasts differ?
Journal Article
How large are economic forecast errors?
Opinion about the reliability of economic forecasts ranges widely. Some argue that they are literally worthless, at the same time that most forecasters can point to a sequence of near perfect predictions. How much confidence should one place in economic forecasts? The errors vary with many factors. ; A crucial determinant of the size of forecast errors is the forecast period; some periods are very difficult to predict while others are relatively easy. By far the largest errors were the sustained underestimations of the acceleration of inflation in 1973-75 and again in 1978-80. In addition, ...
Journal Article
Diversity, uncertainty, and accuracy of inflation forecasts
Uncertainty is a key concept in both economic theory and economic practice. Yet, economic forecasts are usually stated as single numbers, or "point estimates," that convey no information about the full array of possible outcomes. The dispersion of individual forecasters' point estimates is often used as an approximation of forecast uncertainty, even though it is neither logically nor empirically related. In fact, the diversity of point estimates is a poor guide to the accuracy of a point estimate forecast. ; This article examines explicit estimates of forecast uncertainty, taken from the ...
Journal Article
How well do financial markets predict the inflation rate?
Journal Article
Consensus forecasts: tyranny of the majority?
Journal Article
The discount rate: the other tool of monetary policy
Although open market operations are clearly the primary monetary policy tool, the discount rate is not without influence. Federal Reserve Banks propose any discount rate changes, and the Board of Governors decides whether to accept, reject, or take no action on their requests. This article examines the involvement and influence of the various Reserve Banks in this process, exploring their participation over a 20-year period. The historical analysis shows that Reserve Banks differ in the frequency, persistence, and direction of their proposals for change. ; The article also develops ...