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Forecasting inflation and growth: do private forecasts match those of policymakers?

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  • William T. Gavin
  • Rachel J. Mandal

Abstract

Federal Open Market Committee (FOMC) projections are important because they provide information for evaluating current monetary policy intentions and because they indicate what FOMC members think will be the likely consequence of their policies. Knowing the Fed’s objectives, their forecasts, and recent deviations of the economy from the forecasts should be sufficient to understand how the Fed is making monetary policy. Results here show that the Blue Chip consensus forecasts are a good proxy for the FOMC views. For example, they match the policymakers’ views as closely as do the Board staff forecasts presented at FOMC meetings. Using alternative forms of the Taylor rule, the authors show that the Blue Chip consensus and the Fed policymakers’ forecasts have almost identical implications for the monetary policy process.

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Bibliographic Info

Article provided by Federal Reserve Bank of St. Louis in its journal Review.

Volume (Year): (2001)
Issue (Month): May ()
Pages: 11-20

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Handle: RePEc:fip:fedlrv:y:2001:i:may:p:11-20:n:v.83no.3

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Keywords: Monetary policy ; Forecasting ; Federal Open Market Committee;

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  8. David H. Romer & Christina D. Romer, 2000. "Federal Reserve Information and the Behavior of Interest Rates," American Economic Review, American Economic Association, American Economic Association, vol. 90(3), pages 429-457, June.
  9. Dean Croushore & Tom Stark, 1999. "A real-time data set for macroeconomists," Working Papers 99-4, Federal Reserve Bank of Philadelphia.
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Citations

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Cited by:
  1. William T. Gavin & Geetanjali Pande, 2008. "FOMC consensus forecasts," Review, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis, issue May, pages 149-164.
  2. Kishor N. Kundan, 2010. "The Superiority of Greenbook Forecasts and the Role of Recessions," National Bank of Poland Working Papers, National Bank of Poland, Economic Institute 74, National Bank of Poland, Economic Institute.
  3. Baghestani, Hamid & Khallaf, Ashraf, 2012. "Predictions of growth in U.S. corporate profits: Asymmetric vs. symmetric loss," International Review of Economics & Finance, Elsevier, Elsevier, vol. 22(1), pages 222-229.
  4. Gavin, William T. & Mandal, Rachel J., 2003. "Evaluating FOMC forecasts," International Journal of Forecasting, Elsevier, Elsevier, vol. 19(4), pages 655-667.
  5. David Reifschneider & Peter Tulip, 2007. "Gauging the uncertainty of the economic outlook from historical forecasting errors," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2007-60, Board of Governors of the Federal Reserve System (U.S.).
  6. Paul Hubert, 2009. "Informational Advantage and Influence of Communicating Central Banks," Documents de Travail de l'OFCE, Observatoire Francais des Conjonctures Economiques (OFCE) 2009-04, Observatoire Francais des Conjonctures Economiques (OFCE).
  7. Travaglini, Guido, 2007. "The U.S. Dynamic Taylor Rule With Multiple Breaks, 1984-2001," MPRA Paper 3419, University Library of Munich, Germany, revised 15 Jun 2007.
  8. Tito Nícias Teixeira da Silva Filho, 2013. "Banks, Asset Management or Consultancies' Inflation Forecasts: is there a better forecaster out there?," Working Papers Series, Central Bank of Brazil, Research Department 310, Central Bank of Brazil, Research Department.
  9. Hamid Baghestani, 2009. "A Comparison of U.S. Housing Starts Forecasts," Economics Bulletin, AccessEcon, vol. 29(4), pages 2525-2530.
  10. Carlos Capistrán-Carmona, 2005. "Bias in Federal Reserve Inflation Forecasts: Is the Federal Reserve Irrational or Just Cautious?," Computing in Economics and Finance 2005, Society for Computational Economics 127, Society for Computational Economics.
  11. Hamid Baghestani, 2014. "On the loss structure of federal reserve forecasts of output growth," Journal of Economics and Finance, Springer, Springer, vol. 38(3), pages 518-527, July.
  12. Paul Hubert, 2010. "Monetary Policy, Imperfect Information and the Expectations Channel," Sciences Po publications info:hdl:2441/f4rshpf3v1u, Sciences Po.
  13. Liu, Dandan & Smith, Julie K., 2014. "Inflation forecasts and core inflation measures: Where is the information on future inflation?," The Quarterly Review of Economics and Finance, Elsevier, Elsevier, vol. 54(1), pages 133-137.
  14. Edward N. Gamber & Julie K. Smith & Matthew Weiss, 2008. "Forecast Errors Before and After the Great Moderation," Working Papers 2008-001, The George Washington University, Department of Economics, Research Program on Forecasting, revised Mar 2009.
  15. Paul Hubert, 2009. "An Empirical Review of Federal Reserve’s Informational Advantage," Documents de Travail de l'OFCE, Observatoire Francais des Conjonctures Economiques (OFCE) 2009-03, Observatoire Francais des Conjonctures Economiques (OFCE).

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