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How Should the Fed Report Uncertainty"

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Abstract

In January 2012 the Fed began reporting ranges of its economic forecasts.�The ranges, however, measure differences of opinion, not variances of economic forecasts.�This paper discusses what the Fed could report in a world in which it used a single macroeconometric model to make its forecasts and guide its policies. Suggestions are then made as to what might be feasible for the Fed to report given that it is unlikely to be willing to commit to a single model.

Suggested Citation

  • Ray C. Fair, 2012. "How Should the Fed Report Uncertainty"," Cowles Foundation Discussion Papers 1864, Cowles Foundation for Research in Economics, Yale University.
    • Handle: RePEc:cwl:cwldpp:1864
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    File URL: https://cowles.yale.edu/sites/default/files/files/pub/d18/d1864.pdf
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    References listed on IDEAS

    as
    1. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    2. Fair, Ray C & Taylor, John B, 1990. "Full Information Estimation and Stochastic Simulation of Models with Rational Expectations," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 5(4), pages 381-392, Oct.-Dec..
    3. Fair, Ray C & Taylor, John B, 1983. "Solution and Maximum Likelihood Estimation of Dynamic Nonlinear Rational Expectations Models," Econometrica, Econometric Society, vol. 51(4), pages 1169-1185, July.
    4. Fair, Ray C, 1993. "Testing the Rational Expectations Hypothesis in Macroeconometric Models," Oxford Economic Papers, Oxford University Press, vol. 45(2), pages 169-190, April.
    5. Ray Fair, 2003. "Optimal Control and Stochastic Simulation of Large Nonlinear Models with Rational Expectations," Computational Economics, Springer;Society for Computational Economics, vol. 21(3), pages 245-256, June.
    6. Parke, William R, 1982. "An Algorithm for FIML and 3SLS Estimation of Large Nonlinear Models," Econometrica, Econometric Society, vol. 50(1), pages 81-95, January.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. [経済]政策委員の大勢見通しなんかいらない
      by himaginary in himaginaryの日記 on 2012-07-24 12:00:00
    2. How to report Fed uncertainty
      by Economic Logician in Economic Logic on 2012-07-18 19:25:00

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    More about this item

    Keywords

    Forecasting uncertainty; Fed policy;

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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