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Why are survey forecasts superior to model forecasts?

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  • Clements, Michael P.

    (University of Warwick)

Abstract

We investigate two characteristics of survey forecasts that are shown to contribute to their superiority over purely model-based forecasts. These are that the consensus forecasts incorporate the effects of perceived changes in the long-run outlook, as well as embodying departures from the path toward the long-run expectation. Both characteristics on average tend to enhance forecast accuracy. At the level of the individual forecasts, there is scant evidence that the second characteristic enhances forecast accuracy, and the average accuracy of the individualforecasts can be improved by applying a mechanical correction. Keywords: consensus forecast, model-based forecasts, long-run expectations.

Suggested Citation

  • Clements, Michael P., 2010. "Why are survey forecasts superior to model forecasts?," The Warwick Economics Research Paper Series (TWERPS) 954, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:954
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    References listed on IDEAS

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    Keywords

    consensus forecast ; model-based forecasts ; long-run expectations JEL Classification: C53 ; E37;
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