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Do FOMC forecasts add value to staff forecasts?

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  • Ellis, Michael A.
  • Liu, Dandan

Abstract

This paper compares the economic forecasts of members of the Board of Governors and presidents of the Federal Reserve Banks, and then investigates the value of each group's forecasts in supplementing the forecasts of the Board of Governors' staff. We find that the presidents tend to forecast higher inflation and real GDP growth, and lower unemployment than the members of the Board of Governors. We also find that the presidents' real GDP and unemployment rate forecasts add value to the real economy forecasts of the staff, while the governors' inflation forecasts add value to the staff's inflation forecasts.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 32 (2013)
Issue (Month): C ()
Pages: 332-340

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Handle: RePEc:eee:poleco:v:32:y:2013:i:c:p:332-340

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Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords: Federal Open Market Committee; Forecasting;

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References

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  1. Peter Tillmann, 2010. "Strategic Forecasting on the FOMC," MAGKS Papers on Economics 201017, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  2. David Romer, 2010. "A New Data Set on Monetary Policy: The Economic Forecasts of Individual Members of the FOMC," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 42(5), pages 951-957, 08.
  3. Henry W. Chappell, Jr. & Rob Roy McGregor & Todd A. Vermilyea, 2005. "Committee Decisions on Monetary Policy: Evidence from Historical Records of the Federal Open Market Committee," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262033305, December.
  4. Johnson, Eric D. & Ellis, Michael A. & Kotenko, Diana, 2012. "Consensus building on the FOMC: An analysis of end of tenure policy preferences," Economics Letters, Elsevier, vol. 117(1), pages 368-371.
  5. Gavin, William T. & Mandal, Rachel J., 2003. "Evaluating FOMC forecasts," International Journal of Forecasting, Elsevier, vol. 19(4), pages 655-667.
  6. Yash P. Mehra & Bansai Sawhney, 2010. "Inflation measure, Taylor rules, and the Greenspan-Bernanke years," Economic Quarterly, Federal Reserve Bank of Richmond, issue 2Q, pages 123-151.
  7. Athanasios Orphanides, 2001. "Monetary Policy Rules Based on Real-Time Data," American Economic Review, American Economic Association, vol. 91(4), pages 964-985, September.
  8. Athanasios Orphanides & Volker Wieland, 2008. "Economic projections and rules of thumb for monetary policy," Review, Federal Reserve Bank of St. Louis, issue Jul, pages 307-324.
  9. Christina D. Romer & David H. Romer, 2008. "The FOMC versus the Staff: Where Can Monetary Policymakers Add Value?," American Economic Review, American Economic Association, vol. 98(2), pages 230-35, May.
  10. Clarida, Richard & Galí, Jordi & Gertler, Mark, 1998. "Monetary Policy Rules and Macroeconomic Stability: Evidence and Some Theory," CEPR Discussion Papers 1908, C.E.P.R. Discussion Papers.
  11. Henry W. Chappell Jr. & Rob Roy McGregor, 2000. "A Long History of FOMC Voting Behavior," Southern Economic Journal, Southern Economic Association, vol. 66(4), pages 906-922, April.
  12. Havrilesky, Thomas & Gildea, John A, 1991. "The Policy Preferences of FOMC Members as Revealed by Dissenting Votes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(1), pages 130-38, February.
  13. Edward N. Gamber & Julie K. Smith, 2007. "Are the Fed’s Inflation Forecasts Still Superior to the Private Sector’s?," Working Papers 2007-002, The George Washington University, Department of Economics, Research Program on Forecasting, revised Jul 2008.
  14. Fendel, Ralf & Rülke, Jan-Christoph, 2012. "Are heterogeneous FOMC forecasts consistent with the Fed’s monetary policy?," Economics Letters, Elsevier, vol. 116(1), pages 5-7.
  15. Yash P. Mehra & Brian D. Minton, 2007. "A Taylor rule and the Greenspan era," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 229-250.
  16. Belden, Susan, 1989. "Policy Preferences of FOMC Members as Revealed by Dissenting Votes," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 21(4), pages 432-41, November.
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