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Forecasting inflation and growth: do private forecasts match those of policymakers?

  • William T. Gavin
  • Rachel J. Mandal

FOMC projections are important because they provide information for evaluating current monetary policy intentions and because they indicate what FOMC members think will be the likely consequence of their policies. Results here show that the Blue Chip consensus forecasts are a good proxy for the FOMC views. For example, they match the policymakers' views as closely as do the Board staff forecasts presented at FOMC meetings. Using alternative forms of the Taylor Rule, we show that the Blue Chip consensus and the Fed Policymakers' forecasts have almost identical implications for the monetary policy process.

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Paper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2000-026.

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Date of creation: 2000
Date of revision:
Publication status: Published in Business Economics, January 2001, 36(1), pp. 13-20
Handle: RePEc:fip:fedlwp:2000-026
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  1. Svensson, Lars E. O. & Woodford, Michael, 2000. "Indicator variables for optimal policy," Working Paper Series 0012, European Central Bank.
  2. Svensson, Lars E.O., 1997. "Inflation Forecast Targeting: Implementing and Monitoring Inflation Targets," Seminar Papers 615, Stockholm University, Institute for International Economic Studies.
  3. Richard Clarida & Jordi Gali & Mark Gertler, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," NBER Working Papers 7147, National Bureau of Economic Research, Inc.
  4. Bernanke, Ben S & Woodford, Michael, 1997. "Inflation Forecasts and Monetary Policy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(4), pages 653-84, November.
  5. David H. Romer & Christina D. Romer, 2000. "Federal Reserve Information and the Behavior of Interest Rates," American Economic Review, American Economic Association, vol. 90(3), pages 429-457, June.
  6. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
  7. Bennett T. McCallum, 1999. "Recent developments in the analysis of monetary policy rules," Review, Federal Reserve Bank of St. Louis, issue Nov, pages 3-12.
  8. Julio J. Rotemberg & Michael Woodford, 1998. "Interest-Rate Rules in an Estimated Sticky Price Model," NBER Working Papers 6618, National Bureau of Economic Research, Inc.
  9. Dean Croushore & Tom Stark, 1999. "A real-time data set for macroeconomists," Working Papers 99-4, Federal Reserve Bank of Philadelphia.
  10. Athanasios Orphanides, 2001. "Monetary Policy Rules Based on Real-Time Data," American Economic Review, American Economic Association, vol. 91(4), pages 964-985, September.
  11. Michael Woodford, 2000. "Pitfalls of Forward-Looking Monetary Policy," American Economic Review, American Economic Association, vol. 90(2), pages 100-104, May.
  12. Michael Dotsey & Brian Scholl, 2000. "Behavior of the real rate of interest over the business cycle," Working Paper 00-09, Federal Reserve Bank of Richmond.
  13. Chari, V V, 1997. "Comment on "Inflation Forecasts and Monetary Policy."," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(4), pages 685-86, November.
  14. Sharon Kozicki, 1999. "How useful are Taylor rules for monetary policy?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 5-33.
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