Tag Archives: judgement

How did the Bank’s forecasts perform before, during and after the crisis?

Nicholas Fawcett, Riccardo Masolo, Lena Koerber, Matt Waldron.

Introduction: forecasting and policy-making

Forecasting is difficult, especially when it concerns the future.  If we needed a reminder, the 2008-09 financial crisis demonstrated that macroeconomic forecasts can be highly inaccurate when the economy is buffeted by large shocks (see, for example, Figure 1).  But that is not a good reason to avoid forecasting: monetary policy takes time to work, so forecasts are indispensable in monetary policymaking.  Instead, we need to understand how different models behave in the eye of the storm: do some cope better during breaks and crises than others?  And can we make better forecasts by using information that is not normally included in economic models?

Continue reading

Comments Off on How did the Bank’s forecasts perform before, during and after the crisis?

Filed under Macroeconomics, Monetary Policy