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Evaluating the OECD's forecasts for economic growth

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  • Jordi Pons

Abstract

The size and nature of the errors in GDP forecasts in the G-7 countries from 1968 to 1995 are examined. These GDP estimates are published by the Organization for Economic Cooperation and Development in OECD Economic Outlook. Two alternative hypotheses are tested concerning why revisions arise. The first hypothesis is that preliminary announcement is simply the true variable measured with error. In this case, the preliminary announcement is an unconditionally unbiased but irrational forecast of the true value. That is, the revision is correlated with known variables. In particular, it is correlated with the preliminary announcement itself. The second hypothesis is that revisions arise because the early GDP estimates are a rational forecast of the true variable. In this case, the error is a rational forecast error and is therefore uncorrelated with known information.

Suggested Citation

  • Jordi Pons, 1999. "Evaluating the OECD's forecasts for economic growth," Applied Economics, Taylor & Francis Journals, vol. 31(7), pages 893-902.
  • Handle: RePEc:taf:applec:v:31:y:1999:i:7:p:893-902
    DOI: 10.1080/000368499323850
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    1. Rathjens, Peter & Robins, Russell P, 1995. "Do Government Agencies Use Public Data?: The Case of GNP," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 170-172, February.
    2. Mork, Knut Anton, 1987. "Ain't Behavin': Forecast Errors and Measurement Errors in Early GNP Estimates," Journal of Business & Economic Statistics, American Statistical Association, vol. 5(2), pages 165-175, April.
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    4. Howrey, E Philip, 1978. "The Use of Preliminary Data in Econometric Forecasting," The Review of Economics and Statistics, MIT Press, vol. 60(2), pages 193-200, May.
    5. Clemen, Robert T., 1989. "Combining forecasts: A review and annotated bibliography," International Journal of Forecasting, Elsevier, vol. 5(4), pages 559-583.
    6. Howrey, E Philip, 1984. "Data Revision, Reconstruction, and Prediction: An Application to Inventory Investment," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 386-393, August.
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    Cited by:

    1. Kenny, Charles & Williams, David, 2001. "What Do We Know About Economic Growth? Or, Why Don't We Know Very Much?," World Development, Elsevier, vol. 29(1), pages 1-22, January.
    2. Masahiro Ashiya, 2003. "The directional accuracy of 15-months-ahead forecasts made by the IMF," Applied Economics Letters, Taylor & Francis Journals, vol. 10(6), pages 331-333.
    3. Masahiro Ashiya, 2009. "Strategic bias and professional affiliations of macroeconomic forecasters," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 28(2), pages 120-130.
    4. 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.

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