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The performance of the Eurosystem/ECB staff macroeconomic projections since the financial crisis

Author

Listed:
  • Page, Adrian
  • Lambrias, Kyriacos

Abstract

This article evaluates the performance of the Eurosystem/ ECB staff macroeconomic projections for the euro area in the context of the elevated macroeconomic volatility and uncertainty that has prevailed since the financial crisis. It finds that there has been considerable variability in projection errors over time. With regard to real GDP growth projections, errors that were substantial during the sovereign debt crisis have become more limited in recent years. As for headline inflation, unexpected fluctuations in oil prices – which in the staff macroeconomic projections are assumed to follow the path of oil price futures – played a dominant role in explaining the errors, as was the case during the pre-crisis years. On the other hand, HICP inflation excluding energy and food has been persistently overprojected since 2013. While these projection errors can also partly be attributed to errors in the conditioning technical assumptions, other factors (such as modelling errors, changes in economic relationships or judgement) have also played a key role at different points in time. The forecast performance of the Eurosystem/ECB staff macroeconomic projections has been broadly similar to that of other international institutions and of private sector forecasters, suggesting that projection errors have been mainly driven by common elements. These may include economic shocks unforeseeable to any forecaster and developments that have become more prominent since the financial crisis, including, among other things, structural reforms, changes in the relationship between slack and prices, globalisation and digitalisation. JEL Classification: C53, E37, E58

Suggested Citation

  • Page, Adrian & Lambrias, Kyriacos, 2019. "The performance of the Eurosystem/ECB staff macroeconomic projections since the financial crisis," Economic Bulletin Articles, European Central Bank, vol. 8.
  • Handle: RePEc:ecb:ecbart:2019:0008:3
    Note: 2586295
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    File URL: https://www.ecb.europa.eu//pub/economic-bulletin/articles/2019/html/ecb.ebart201908_03~15a92cfec1.en.html
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    Citations

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    Cited by:

    1. Carola Conces Binder & Rodrigo Sekkel, 2024. "Central bank forecasting: A survey," Journal of Economic Surveys, Wiley Blackwell, vol. 38(2), pages 342-364, April.
    2. Eleni Argiri & Stephen G. Hall & Angeliki Momtsia & Daphne Marina Papadopoulou & Ifigeneia Skotida & George S. Tavlas & Yongli Wang, 2024. "An evaluation of the inflation forecasting performance of the European Central Bank, the Federal Reserve, and the Bank of England," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 43(4), pages 932-947, July.
    3. G. Kontogeorgos & K. Lambrias, 2022. "Evaluating the Eurosystem/ECB staff macroeconomic projections: The first 20 years," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 41(2), pages 213-229, March.
    4. Glas, Alexander & Heinisch, Katja, 2021. "Conditional macroeconomic forecasts: Disagreement, revisions and forecast errors," IWH Discussion Papers 7/2021, Halle Institute for Economic Research (IWH).
    5. Glas, Alexander & Heinisch, Katja, 2023. "Conditional macroeconomic survey forecasts: Revisions and errors," Journal of International Money and Finance, Elsevier, vol. 138(C).

    More about this item

    Keywords

    Eurosystem/ ECB forecasts; Forecast errors;

    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
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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