Perspectives on the Accuracy of Macro-Econometric Forecasting Models

Abstract

Times of economic crisis have always (since Joseph in Egypt) generated considerable - though often transient - interest in the potential value of business cycle theories (metaphysical and otherwise) as guides to the short-run evolution of the economy. the modern (20th Century) evolution of economic forecasting has, in fact, a symbiotic relationship both to the development of theories designed to explain fluctuations in macroeconomic activity and to the generation of an ever-broader spectrum of high-quality data on economic activity. It is, therefore, useful to consider forecasts from structural macroeconometric models, as part of a longer term and continuing effort to perceive the future course of the economy.