Evaluating Federal Reserve predictions of growth in consumer spending
This study shows that Federal Reserve forecasts of growth in both total consumption and durable spending are generally rational under asymmetric loss, and the forecasts of growth in nondurable (services) spending, while unbiased (biased), fail to be rational. Yet, these forecasts are all directionally accurate. The forecasts of growth in total consumption, durable and services spending are more (less) accurate in predicting the downward (upward) moves and are thus of value when policymakers assign more (less) cost to incorrect downward (upward) predictions. The forecasts of growth in nondurable spending are equally accurate in predicting the downward and upward moves and are thus of value when policymakers assign similar cost to both incorrect downward and upward predictions. Utilizing survey data to measure the private forecasts, we further provide partial support for the asymmetric information hypothesis that the Federal Reserve has useful information about the state of the economy that is not known by the public.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 45 (2013)
Issue (Month): 13 (May)
|Contact details of provider:|| Web page: http://www.tandfonline.com/RAEC20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/RAEC20|
When requesting a correction, please mention this item's handle: RePEc:taf:applec:45:y:2013:i:13:p:1637-1646. 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: (Michael McNulty)
If references are entirely missing, you can add them using this form.