Essay Oced Forecast

4622 Words Apr 13th, 2014 19 Pages
Please cite this note as: OECD (2014), “OECD forecasts during and after the financial crisis: A Post Mortem”, OECD Economics Department Policy Notes, No. 23 February 2014.

OECD Economics Department Policy Note no. 23
February 2014

This Policy Note is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries.

This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and
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Forecast errors were larger in countries that are more open to external developments and hence exposed to shocks from other economies. Larger forecast errors over 2007-12 have occurred in countries with more stringent pre-crisis labour and product market regulations. Growth in the recovery has been weaker relative to predictions in countries in which banks had low capital ratios pre-crisis. Stronger projected fiscal consolidation has been associated with weaker-than-projected growth, but this conclusion holds only in some years, and only when Greece is included. The repeated assumption that the euro crisis would dissipate over time, and that sovereign bond yield differentials would narrow, has been a more important source of error. The forecasting experience in the wake of the crisis has led to a number of changes in forecasting procedures and communication – in the OECD as well as in other forecasting institutions.

Forecasting during the crisis 1. This note discusses OECD forecast performance over the period 2007-12. It focuses on the lessons that can be learned from cross-country differences in growth forecast errors and the changes to forecasting models and procedures that have been prompted by the experience of the crisis. A more detailed statistical evaluation of OECD forecast performance, and information on growth and inflation projection errors in different economies, is provided in the accompanying

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