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Are We More Accurate? Revisiting the European Commission’s Macroeconomic Forecasts

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  • Andras Chabin
  • Sébastien Lamproye
  • Milan Výškrabka

Abstract

In this paper, we present the results of the comprehensive assessment of the accuracy of European Economic Forecasts. High-quality macroeconomic forecasts are a prerequisite for economic surveillance of the European Commission. We evaluate forecasts for three key variables – GDP growth, consumer price inflation and the general government budget balance – on two forecast horizons – current year and oneyear-ahead – over the period 2000-2017. Pointing to some improvement in the accuracy recently, the forecasts continue to show a satisfactory track record which does not differ much from the forecast track records of other international institutions. The Commission’s forecasts present largely an unbiased outlook for near term economic developments, accurately foresee an acceleration and deceleration in the underlying variables and mostly contain information beyond a naïve forecast. There is room for improvement, however. The forecasts appear to be prone to repeating errors, which to some extent seems to be related to an overly conservative assessment of the business cycle dynamics and to a lesser extent to errors in technical assumptions.

Suggested Citation

  • Andras Chabin & Sébastien Lamproye & Milan Výškrabka, 2020. "Are We More Accurate? Revisiting the European Commission’s Macroeconomic Forecasts," European Economy - Discussion Papers 128, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  • Handle: RePEc:euf:dispap:128
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    References listed on IDEAS

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    1. Filip Keereman, 1999. "The track record of the Commission forecasts," European Economy - Economic Papers 2008 - 2015 137, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    4. Giannone, Domenico & Lenza, Michele & Momferatou, Daphne & Onorante, Luca, 2014. "Short-term inflation projections: A Bayesian vector autoregressive approach," International Journal of Forecasting, Elsevier, vol. 30(3), pages 635-644.
    5. G. Elliott & C. Granger & A. Timmermann (ed.), 2013. "Handbook of Economic Forecasting," Handbook of Economic Forecasting, Elsevier, edition 1, volume 2, number 2.
    6. Nigel Pain & Christine Lewis & Thai-Thanh Dang & Yosuke Jin & Pete Richardson, 2014. "OECD Forecasts During and After the Financial Crisis: A Post Mortem," OECD Economics Department Working Papers 1107, OECD Publishing.
    7. Marco Fioramanti, ISTAT & Laura González Cabanillas & Bjorn Roelstraete & Salvador Adrian Ferrandis Vallterra, 2016. "European Commission's Forecasts Accuracy Revisited: Statistical Properties and Possible Causes of Forecast Errors," European Economy - Discussion Papers 027, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
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    Cited by:

    1. Fabio Ashtar Telarico, 2023. "Опростяване И Усъвършенстване [Simplifying and Improving]," Post-Print hal-03989969, HAL.
    2. Penalver Adrian, & Szczerbowicz Urszula, 2021. "Monetary policy measures during the first phase of the Covid-19 crisis [Les mesures de politique monétaire pendant la première phase de la crise de la Covid-19]," Bulletin de la Banque de France, Banque de France, issue 234.
    3. Cronin, David & McInerney, Niall, 2023. "Official fiscal forecasts in EU member states under the European Semester and Fiscal Compact – An empirical assessment," European Journal of Political Economy, Elsevier, vol. 76(C).

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    More about this item

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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