IDEAS home Printed from https://ideas.repec.org/a/ecj/econjl/v105y1995i429p410-20.html
   My bibliography  Save this article

Rationality and the Role of Judgement in Macroeconomic Forecasting

Author

Listed:
  • Clements, Michael P

Abstract

This paper examines the effects of judgmental adjustments on the rationality of macroeconomic forecasts. Published forecasts based on large-scale models are rarely purely model-based but often include extensive adjustments. Forecasters' adjustments tend to improve forecast accuracy but there is no evidence of their impact on the rationality of forecasts. Using series of revisions to forecasts, the author finds little evidence that published forecasts are excessively smooth in the Nordhaus (1987) sense but intercept corrections do appear to reduce the variation over time in purely model-based forecasts and to alter the underlying output-inflation trade-off implicit in the model. Copyright 1995 by Royal Economic Society.

Suggested Citation

  • Clements, Michael P, 1995. "Rationality and the Role of Judgement in Macroeconomic Forecasting," Economic Journal, Royal Economic Society, vol. 105(429), pages 410-420, March.
  • Handle: RePEc:ecj:econjl:v:105:y:1995:i:429:p:410-20
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0013-0133%28199503%29105%3A429%3C410%3ARATROJ%3E2.0.CO%3B2-G&origin=bc
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

    File URL: http://www.res.org.uk/datasets/vol105iss2.htm
    File Function: supporting dataset
    Download Restriction: no

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Clements, Michael P., 2010. "Explanations of the inconsistencies in survey respondents' forecasts," European Economic Review, Elsevier, vol. 54(4), pages 536-549, May.
    2. Hendry, David F. & Clements, Michael P., 2003. "Economic forecasting: some lessons from recent research," Economic Modelling, Elsevier, vol. 20(2), pages 301-329, March.
    3. Franses, Ph.H.B.F. & Kranendonk, H.C. & Lanser, D., 2007. "On the optimality of expert-adjusted forecasts," Econometric Institute Research Papers EI 2007-38, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    4. Dupuy Arnaud, 2005. "An evaluation of labour market forecasts by type of education and occupation for 2002," ROA Working Paper 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    5. Michael Clements, 2016. "Are Macro-Forecasters Essentially The Same? An Analysis of Disagreement, Accuracy and Efficiency," ICMA Centre Discussion Papers in Finance icma-dp2016-08, Henley Business School, Reading University.
    6. Lawrence, Michael & O'Connor, Marcus, 2000. "Sales forecasting updates: how good are they in practice?," International Journal of Forecasting, Elsevier, vol. 16(3), pages 369-382.
    7. Masahiro Ashiya, 2006. "Testing the rationality of forecast revisions made by the IMF and the OECD," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 25(1), pages 25-36.
    8. Dupuy Arnaud, 2009. "An evaluation of the forecast of the indicator of the labour market gap," ROA Technical Report 003, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    9. Duo Qin, 2010. "Econometric Studies of Business Cycles in the History of Econometrics," Working Papers 669, Queen Mary University of London, School of Economics and Finance.
    10. repec:lan:wpaper:539557 is not listed on IDEAS
    11. Fred Joutz & Michael P. Clements & Herman O. Stekler, 2007. "An evaluation of the forecasts of the federal reserve: a pooled approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(1), pages 121-136.
    12. repec:eee:intfor:v:33:y:2017:i:3:p:591-604 is not listed on IDEAS
    13. repec:lan:wpaper:470 is not listed on IDEAS
    14. David F. Hendry & Michael P. Clements, 1994. "Can Econometrics Improve Economic Forecasting?," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 130(III), pages 267-298, September.
    15. Jakab M., Zoltán & Kovács, Mihály András & Kiss, Gergely, 2006. "Mit tanultunk?. A jegybanki előrejelzések szerepe az inflációs cél követésének első öt évében Magyarországon
      [What are we studying?. The role of central-bank forecasts in Hungarian inflation target
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1101-1134.
    16. Ulrich K. Müller & Gebhard Kirchgässner, 2006. "Are forecasters reluctant to revise their predictions? Some German evidence," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 25(6), pages 401-413.
    17. repec:lan:wpaper:425 is not listed on IDEAS
    18. Lawrence, Michael & Goodwin, Paul & O'Connor, Marcus & Onkal, Dilek, 2006. "Judgmental forecasting: A review of progress over the last 25 years," International Journal of Forecasting, Elsevier, vol. 22(3), pages 493-518.
    19. repec:lan:wpaper:413 is not listed on IDEAS
    20. Xiao, Jinzhi & Lence, Sergio H. & Hart, Chad, 2014. "Usda And Private Analysts' Forecasts Of Ending Stocks: How Good Are They?," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170642, Agricultural and Applied Economics Association.
    21. Vuchelen, Jef & Gutierrez, Maria-Isabel, 2005. "A direct test of the information content of the OECD growth forecasts," International Journal of Forecasting, Elsevier, vol. 21(1), pages 103-117.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecj:econjl:v:105:y:1995:i:429:p:410-20. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: http://edirc.repec.org/data/resssea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.