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Growth—Now and Forever?

Author

Listed:
  • Giang Ho

    (IMF’s African Department)

  • Paolo Mauro

    (IMF’s African Department)

Abstract

Abstract Forecasters often predict continued rapid economic growth into the medium and long term for countries that have recently experienced strong growth. Using long-term forecasts of economic growth from the IMF/World Bank staff’s Debt Sustainability Analyses for a panel of countries, the article shows that the baseline forecasts are more optimistic than warranted by past international growth experience. Further, by comparing the IMF’s World Economic Outlook forecasts with actual growth outcomes, the article shows that optimism bias is greater the longer the forecast horizon.

Suggested Citation

  • Giang Ho & Paolo Mauro, 2016. "Growth—Now and Forever?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 526-547, August.
  • Handle: RePEc:pal:imfecr:v:64:y:2016:i:3:d:10.1057_imfer.2016.12
    DOI: 10.1057/imfer.2016.12
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    References listed on IDEAS

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    5. Easterly William R., 2001. "Growth Implosions and Debt Explosions: Do Growth Slowdowns Cause Public Debt Crises?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 1(1), pages 1-26, February.
    6. Lant Pritchett & Lawrence H. Summers, 2013. "Asia-phoria meet regression to the mean," Proceedings, Federal Reserve Bank of San Francisco, pages 1-35.
    7. Robert J. Barro, 1991. "Economic Growth in a Cross Section of Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 407-443.
    8. Pritchett, Lant, 2000. "Understanding Patterns of Economic Growth: Searching for Hills among Plateaus, Mountains, and Plains," World Bank Economic Review, World Bank Group, vol. 14(2), pages 221-250, May.
    9. Allan Timmermann, 2007. "An Evaluation of the World Economic Outlook Forecasts," IMF Staff Papers, Palgrave Macmillan, vol. 54(1), pages 1-33, May.
    10. Grace Juhn & Prakash Loungani, 2002. "Further Cross-Country Evidence on the Accuracy of the Private Sector's Output Forecasts," IMF Staff Papers, Palgrave Macmillan, vol. 49(1), pages 1-4.
    11. Richard H. Thaler, 2000. "From Homo Economicus to Homo Sapiens," Journal of Economic Perspectives, American Economic Association, vol. 14(1), pages 133-141, Winter.
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    Citations

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    Cited by:

    1. Nikoloz Gigineishvili & Paolo Mauro & Ke Wang, 2014. "How Solid Is Economic Growth in the East African Community?," IMF Working Papers 14/150, International Monetary Fund.
    2. Avellan, Leopoldo & Vuletin, Guillermo, 2015. "Fiscal procyclicality and output forecast errors," Journal of International Money and Finance, Elsevier, vol. 55(C), pages 193-204.
    3. Aromí, J. Daniel, 2019. "Medium term growth forecasts: Experts vs. simple models," International Journal of Forecasting, Elsevier, vol. 35(3), pages 1085-1099.
    4. Tomas Hellebrandt & Paolo Mauro, 2015. "The Future of Worldwide Income Distribution," Working Paper Series WP15-7, Peterson Institute for International Economics.
    5. MORIKAWA Masayuki, 2019. "Uncertainty in Long-Term Macroeconomic Forecasts: Ex post Evaluation of Forecasts by Economics Researchers," Discussion papers 19084, Research Institute of Economy, Trade and Industry (RIETI).
    6. International Monetary Fund, 2015. "Haiti; Ex Post Assessment of Longer-Term Engagement," IMF Staff Country Reports 15/4, International Monetary Fund.
    7. Grigoli, Francesco & Herman, Alexander & Swiston, Andrew & Di Bella, Gabriel, 2015. "Output gap uncertainty and real-time monetary policy," Russian Journal of Economics, Elsevier, vol. 1(4), pages 329-358.
    8. Tomas Hellebrandt & Paolo Mauro, 2015. "The Future of Worldwide Income Distribution," LIS Working papers 635, LIS Cross-National Data Center in Luxembourg.
    9. Giang Ho & Paolo Mauro, 2014. "Rapid Growth in Emerging Markets and Developing Economies: Now and Forever?," Policy Briefs PB14-26, Peterson Institute for International Economics.
    10. Jalles, João Tovar & Karibzhanov, Iskander & Loungani, Prakash, 2015. "Cross-country evidence on the quality of private sector fiscal forecasts," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 186-201.

    More about this item

    Keywords

    O47; E17; H68;

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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