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How did forecasters respond to the American growth slowdown since the mid-2000s?

Author

Listed:
  • Gabriel Mathy
  • Daniel Kirwin

Abstract

Byrne et al. (2016) found that worldwide growth slowed down in the mid-2000s. This paper both confirms this result for the United States and looks at how forecasters responded to this slowdown in GDP growth. GDP is unambiguously and consistently below its forecasted level and so forecasts errors are persistently positive, consistent with a growth slowdown that is not forecasted in advance. In response to this slowdown, IMF and CBO forecasters adjusted their forecasts downwards while the Survey of Professional Forecasters made overoptimistic forecasts. We discuss the recent recession and its potential contribution to the current secular stagnation.

Suggested Citation

  • Gabriel Mathy & Daniel Kirwin, 2017. "How did forecasters respond to the American growth slowdown since the mid-2000s?," Working Papers 2017-02, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2017-02
    DOI: 10.17606/e84t-0213
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    File URL: https://doi.org/10.17606/e84t-0213
    File Function: First version, 2017
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    More about this item

    Keywords

    Forecast errors; growth slowdown; secular stagnation; hysteresis;

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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