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Too Many Cooks? The German Joint Diagnosis and Its Production

Author

Listed:
  • Ulrich Fritsche

    () (Department for Socioeconomics, University of Hamburg)

  • Ullrich Heilemann

    () (Faculty of Economics, University of Leipzig)

Abstract

The “Gemeinschaftsdiagnose” [Joint Diagnosis (JD)] is the most influential semi-annual mac-roeconomic forecast in Germany. Jointly produced by up to six institutes, its accuracy as well as the large number of involved participants is often criticised. This study examines the JD’s growth and inflation forecasts from 1970 to 2007, including most of the contributions of the forecasts submitted by the five institutes at the start of the JD. Four questions are addressed: (i) Are these forecasts unbiased and efficient? (ii) How do results change if we presume an asymmetric loss function? (iii) Are any of the institutes more accurate than the JD? Are five/six institutes necessary and at what cost? (iv) Do the institutes make strategic forecasts to influence the JD forecast? Results show that there is no strong evidence of bias or inefficiency of the institutes’ forecasts and no evidence of asymmetric loss functions. Five institutes are not necessary, but it is very hard to predict the redundant institutes; however, the loss of accu-racy by employing only two is small.

Suggested Citation

  • Ulrich Fritsche & Ullrich Heilemann, 2010. "Too Many Cooks? The German Joint Diagnosis and Its Production," Macroeconomics and Finance Series 201001, Hamburg University, Department Wirtschaft und Politik.
  • Handle: RePEc:hep:macppr:201001
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    File URL: https://www.wiso.uni-hamburg.de/repec/hepdoc/macppr_1_2010.pdf
    File Function: First version, 2010
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    Cited by:

    1. Katharina Glass, 2018. "Predictability of Euro Area Revisions," Macroeconomics and Finance Series 201801, Hamburg University, Department Wirtschaft und Politik.
    2. Ha Quyen Ngo & Niklas Potrafke & Marina Riem & Christoph Schinke, 2018. "Ideology and Dissent among Economists: The Joint Economic Forecast of German Economic Research Institutes," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 44(1), pages 135-152, January.

    More about this item

    Keywords

    Forecast accuracy; joint forecasts; strategic forecast behaviour;

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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