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Growth—Now and Forever?

Author

Listed:
  • Giang Ho

    (IMF’s African Department)

  • Paolo Mauro

    (IMF’s African Department)

Abstract

Forecasters often predict continued rapid economic growth into the medium and long term for countries that have recently experienced strong growth. Using long-term forecasts of economic growth from the IMF/World Bank staff’s Debt Sustainability Analyses for a panel of countries, the article shows that the baseline forecasts are more optimistic than warranted by past international growth experience. Further, by comparing the IMF’s World Economic Outlook forecasts with actual growth outcomes, the article shows that optimism bias is greater the longer the forecast horizon.

Suggested Citation

  • Giang Ho & Paolo Mauro, 2016. "Growth—Now and Forever?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(3), pages 526-547, August.
    • Handle: RePEc:pal:imfecr:v:64:y:2016:i:3:d:10.1057_imfer.2016.12
    DOI: 10.1057/imfer.2016.12
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    Citations

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    Cited by:

    1. Sinem Kilic Celik & M. Ayhan Kose & Franziska Ohnsorge, 2023. "Potential Growth Prospects: Risks, Rewards and Policies," CAMA Working Papers 2023-19, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Avellan, Leopoldo & Vuletin, Guillermo, 2015. "Fiscal procyclicality and output forecast errors," Journal of International Money and Finance, Elsevier, vol. 55(C), pages 193-204.
    3. Halvard Buhaug & Jonas Vestby, 2019. "On Growth Projections in the Shared SocioeconomicPathways," Global Environmental Politics, MIT Press, vol. 19(4), pages 118-132, November.
    4. International Monetary Fund, 2015. "Haiti: Ex Post Assessment of Longer-Term Engagement," IMF Staff Country Reports 2015/004, International Monetary Fund.
    5. Aromí, J. Daniel, 2019. "Medium term growth forecasts: Experts vs. simple models," International Journal of Forecasting, Elsevier, vol. 35(3), pages 1085-1099.
    6. Tomas Hellebrandt & Paolo Mauro, 2015. "The Future of Worldwide Income Distribution," LIS Working papers 635, LIS Cross-National Data Center in Luxembourg.
    7. Grigoli, Francesco & Herman, Alexander & Swiston, Andrew & Di Bella, Gabriel, 2015. "Output gap uncertainty and real-time monetary policy," Russian Journal of Economics, Elsevier, vol. 1(4), pages 329-358.
    8. Morikawa, Masayuki, 2022. "Uncertainty in long-term macroeconomic forecasts: Ex post evaluation of forecasts by economics researchers," The Quarterly Review of Economics and Finance, Elsevier, vol. 85(C), pages 8-15.
    9. Mr. Nikoloz Gigineishvili & Mr. Paolo Mauro & Ke Wang, 2014. "How Solid Is Economic Growth in the East African Community?," IMF Working Papers 2014/150, International Monetary Fund.
    10. Jose De Gregorio, 2015. "From Rapid Recovery to Slowdown: Why Recent Economic Growth in Latin America Has Been Slow," Policy Briefs PB15-6, Peterson Institute for International Economics.
    11. Jalles, João Tovar & Karibzhanov, Iskander & Loungani, Prakash, 2015. "Cross-country evidence on the quality of private sector fiscal forecasts," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 186-201.
    12. Julia Estefania‐Flores & Davide Furceri & Siddharth Kothari & Jonathan D. Ostry, 2023. "Worse than you think: Public debt forecast errors in advanced and developing economies," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 42(3), pages 685-714, April.
    13. Yan Carrière-Swallow & José Marzluf, 2023. "Macrofinancial Causes of Optimism in Growth Forecasts," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 71(2), pages 509-537, June.
    14. Klaus-Peter Hellwig, 2018. "Overfitting in Judgment-based Economic Forecasts: The Case of IMF Growth Projections," IMF Working Papers 2018/260, International Monetary Fund.
    15. Giang Ho & Paolo Mauro, 2014. "Rapid Growth in Emerging Markets and Developing Economies: Now and Forever?," Policy Briefs PB14-26, Peterson Institute for International Economics.

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    More about this item

    Keywords

    O47; E17; H68;
    All these keywords.

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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