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The accuracy of the European Commission's forecasts re-examined

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  • Laura Gonzalez Cabanillas
  • Alessio Terzi

Abstract

This paper analyses the Commission's forecast track record, by building on previous analyses. The extension of the observation period to 2011 allows a first analysis of forecast accuracy during the years of the economic and financial crisis. Over the full timespan, forecasts for the EU and euro area are found to be generally unbiased. The same holds true for the outlook for most Member States, largely confirming earlier results. Moreover, the Commission services track record appears generally in line with that of the OECD, IMF and Consensus Economics, and in some cases better. Finally, while the analysis points to a limited impact of the crisis on the accuracy of the Commission's current-year forecasts, a significant deterioration of the accuracy of year-ahead projections is found. This applies in particular for the forecasts of GDP, investment, inflation and the government budget balance, due mainly to larger forecast errors in the recession year 2009, which by all standards proved exceptional and unanticipated by institutional and market forecasters.

Suggested Citation

  • Laura Gonzalez Cabanillas & Alessio Terzi, 2012. "The accuracy of the European Commission's forecasts re-examined," European Economy - Economic Papers 2008 - 2015 476, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:ecopap:0476
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    Cited by:

    1. repec:wly:jforec:v:36:y:2017:i:7:p:784-794 is not listed on IDEAS
    2. Kamps, Christophe & De Stefani, Roberta & Leiner-Killinger, Nadine & Rüffer, Rasmus & Sondermann, David, 2014. "The identification of fiscal and macroeconomic imbalances - unexploited synergies under the strengthened EU governance framework," Occasional Paper Series 157, European Central Bank.
    3. Lucian Liviu ALBU & Carlos MatéJIMÉNEZ & Mihaela SIMIONESCU, 2015. "The Assessment of Some Macroeconomic Forecasts for Spain using Aggregated Accuracy Indicators," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 30-47, June.
    4. Nicolas Carnot & Phil Evans & Serena Fatica & Gilles Mourre, 2014. "Improving Income Stabilisation in EMU: An Analytical Exploration," Working Papers CEB 14-022, ULB -- Universite Libre de Bruxelles.
    5. Mihaela SIMIONESCU, 2014. "Improving The Inflation Rate Forecasts Of Romanian Experts Using A Fixed-Effects Models Approach," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 13, pages 87-102, June.
    6. Lilia Cavallari & Simone Romano, 2016. "Foresight And The Macroeconomic Impact Of Fiscal Policy: Evidence For France, Germany And Italy," Working Papers 0216, CREI Università degli Studi Roma Tre, revised 2016.
    7. Niels Gilbert & Jasper de Jong, 2014. "Does the Stability and Growth Pact induce a bias in the EC's fiscal forecasts," DNB Working Papers 451, Netherlands Central Bank, Research Department.
    8. Drechsel, Katja & Giesen, Sebastian & Lindner, Axel, 2014. "Outperforming IMF Forecasts by the Use of Leading Indicators," Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100393, Verein für Socialpolitik / German Economic Association.
    9. Mihaela Simionescu, 2015. "The Accuracy Analysis of Inflation Rate Forecasts in Euro Area," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 3(1), pages 80-85, May.
    10. Carone, Giuseppe & Berti, Katia, 2014. "Assessing public debt sustainability in EU member states:a guide," MPRA Paper 62570, University Library of Munich, Germany.
    11. Niels D. Gilbert & Jasper F.M. Jong, 2017. "Do European fiscal rules induce a bias in fiscal forecasts? Evidence from the Stability and Growth Pact," Public Choice, Springer, vol. 170(1), pages 1-32, January.
    12. repec:eso:journl:v:47:y:2016:i:1:p:33-68 is not listed on IDEAS
    13. Michael K Andersson & Ted Aranki & André Reslow, 2017. "Adjusting for information content when comparing forecast performance," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 36(7), pages 784-794, November.

    More about this item

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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