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Can the IMF's Medium-Term Growth Projections Be Improved?

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  • Mr. Juan Zalduendo
  • Ms. Catia Batista

Abstract

Numerous reports have noted that the IMF's medium-term growth projections are overly optimistic, raising questions as to how these can be improved. To this end, we estimate a growth model and examine its out-of-sample forecasting properties relative to those of IMF projections. The model's projections outperform those of the IMF in all regions and among most income groups-projections are less biased (one-quarter of the IMF bias) and have smaller standard errors (20 percent lower root mean squared errors) even after controlling for the IMF's macroeconomic assumptions. The paper does not attempt to address the criticisms that have been leveled against the empirical growth literature, but the results suggest that benefits can be derived from bringing systematic analysis to bear on cross-country information.

Suggested Citation

  • Mr. Juan Zalduendo & Ms. Catia Batista, 2004. "Can the IMF's Medium-Term Growth Projections Be Improved?," IMF Working Papers 2004/203, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2004/203
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    Cited by:

    1. Hofer Helmut & Weyerstraß Klaus & Schmidt Torsten, 2011. "Practice and Prospects of Medium-term Economic Forecasting," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 231(1), pages 153-171, February.
    2. Felipe, Jesus & Kumar, Utsav & Abdon, Arnelyn, 2012. "Using capabilities to project growth, 2010–2030," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 153-166.
    3. Tobias Kitlinski & Torsten Schmidt, 2011. "The Forecasting Performance of an Estimated Medium Run Model," Ruhr Economic Papers 0301, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    4. repec:zbw:rwirep:0301 is not listed on IDEAS
    5. Krkoska, Libor & Teksoz, Utku, 2007. "Accuracy of GDP growth forecasts for transition countries: Ten years of forecasting assessed," International Journal of Forecasting, Elsevier, vol. 23(1), pages 29-45.
    6. Torsten Schmidt & Helmut Hofer & Klaus Weyerstrass, 2010. "Practice and Prospects of Medium-term Economic Forecasting," Ruhr Economic Papers 0177, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    7. Mr. Juan Zalduendo, 2005. "Pace and Sequencing of Economic Policies," IMF Working Papers 2005/118, International Monetary Fund.
    8. Mihaela SIMIONESCU, 2014. "Improving The Inflation Rate Forecasts Of Romanian Experts Using A Fixed-Effects Models Approach," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 13, pages 87-102, June.
    9. Judith Gold & Mr. Ruben V Atoyan & Miss Cornelia Staritz, 2007. "Guyana: Why Has Growth Stopped? An Empirical Study on the Stagnation of Economic Growth," IMF Working Papers 2007/086, International Monetary Fund.
    10. repec:zbw:rwirep:0177 is not listed on IDEAS

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