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Most probable or more prudent? Analysing CFP's macroeconomic projections, 2015-2019

Author

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  • Nuno Goncalves

Abstract

The CFP macroeconomic projections provide an independent contribute for the public debate on economic developments and fiscal policy in Portugal. They are an important input for the endorsement of macroeconomic forecasts underlying budgetary programming documents. According to the Law, these must be based on the most likely macro scenario or on a more prudent scenario. Naturally, the CFP projections are also following the same principles, and so it is crucial to assess whether they are the "most probable" or "more prudent". This paper makes a first study of CFP macroeconomic projections regarding forecasting performance and its optimality properties. In general, the results suggest that CFP projections are prudent and fulfil most optimality conditions, proving to be a reliable contribute to policy debate. The findings also show that CFP projection errors are also in line with those of other institutions that develop scenarios under the no policy change assumption.

Suggested Citation

  • Nuno Goncalves, 2022. "Most probable or more prudent? Analysing CFP's macroeconomic projections, 2015-2019," CFP Occasional Papers 02/2022, Portuguese Public Finance Council.
    • Handle: RePEc:alf:opaper:2022-02
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    File URL: https://www.cfp.pt/en/publications/other-publications/most-probable-or-more-prudent-analyzing-cfps-macroeconomic-projections-2015-2019
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    More about this item

    Keywords

    Macroeconomic forecasts; forecast performance and evaluation; Portugal;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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