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German economy 2001: Forecast and reality

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  • Wolfgang Nierhaus

Abstract

In retrospect, 2001 was a year of "disappointed economic hopes", the Ifo Institute also having to make several "downward revisions" of its forecasts for the German economy. The false assessment of GDP growth had two causes: economic development for the second semester of 2000 turned out to be worse than it appeared in December 2000, and the robustness of the economy was overestimated. The forecasting error can also be explained by an estimation error in the individual use components of GDP. In general, economic forecasting consists of theory-based "if-then" statements, in which we place the greatest subjective likelihood at the time they are made but whose ultimate accuracy is by no means assured. If key data change constantly, as was the case with regard to world economic activity last year, forecasting errors and forecasting revisions are virtually automatic. The dilemma for the economic forecaster is that in economically turbulent times in which the demand for economic forecasting is especially great, the conditions for accurate forecasting are particularly poor.

Suggested Citation

  • Wolfgang Nierhaus, 2002. "German economy 2001: Forecast and reality," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 55(02), pages 32-34, January.
    • Handle: RePEc:ces:ifosdt:v:55:y:2002:i:02:p:32-34
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    References listed on IDEAS

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    1. Wolfgang Nierhaus, 2001. "Business forecasts and forecasting risks," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 54(16), pages 17-21, October.
    2. Wolfgang Nierhaus, 1999. "Aus dem Instrumentenkasten der Konjunkturanalyse : Veränderungen im Vergleich," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 52(27), pages 11-19, October.
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    Cited by:

    1. Steffen Henzel & Wolfgang Nierhaus & Timo Wollmershäuser, 2014. "Evaluation der ifo Konjunkturprognosen," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(17), pages 43-45, September.

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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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