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The Performance of National Institute Economic Forecasts

Published online by Cambridge University Press:  26 March 2020

David Poulizac ,
Martin Weale  and
Garry Young
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Abstract

Economic forecasts are usually presented as point estimates, despite the margin of uncertainty which surrounds them. In November 1995 the National Institute began to present estimates of the probability of the government's inflation target being met and of there being a fall in GDP. This article describes the methods that we use for calculating these probabilities. We show, by studying eight successive forecasts of the same event, how forecast reliability improves as the forecast horizon approaches and demonstrate that this can be explained in terms of the accumulation of information about the state of the economy.

Type
Articles
Information
National Institute Economic Review , Volume 156 , May 1996 , pp. 55 - 62
Copyright
Copyright © 1996 National Institute of Economic and Social Research

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Footnotes

∗

We are grateful to members of the Editorial Board and particularly to Nigel Pain for very helpful comments on earlier drafts. This paper draws on research funded by the ESRC to whom we are grateful.

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