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Growth Forecasts vs. Realizations: The Role of Stimulus and Stringency Measures during the Pandemic

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  • Gudum, Melis

Abstract

This paper investigates the relationship between different institutions’ GDP growth forecasts for the year 2020 and the actual realized growth levels in the same year. To this end, we use data from the IMF and World Bank’s publications and show that on average, an economy has overperformed its expected growth rate when i) the sizes of announced fiscal and macro-financial stimulus measures are larger, ii) The extent of the government stringency measures is smaller, iii) the pre-pandemic level of GDP per capita is larger. Our results can be crucial for policy-makers when they design growth-oriented economic policies.

Suggested Citation

  • Gudum, Melis, 2021. "Growth Forecasts vs. Realizations: The Role of Stimulus and Stringency Measures during the Pandemic," MPRA Paper 108447, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:108447
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    References listed on IDEAS

    as
    1. Frank-Oliver Aldenhoff, 2007. "Are economic forecasts of the International Monetary Fund politically biased? A public choice analysis," The Review of International Organizations, Springer, vol. 2(3), pages 239-260, September.
    2. Roy Batchelor, 2001. "How useful are the forecasts of intergovernmental agencies? The IMF and OECD versus the consensus," Applied Economics, Taylor & Francis Journals, vol. 33(2), pages 225-235.
    3. An, Zidong & Ball, Laurence & Jalles, Joao & Loungani, Prakash, 2019. "Do IMF forecasts respect Okun’s law? Evidence for advanced and developing economies," International Journal of Forecasting, Elsevier, vol. 35(3), pages 1131-1142.
    4. Axel Dreher & Silvia Marchesi & James Vreeland, 2008. "The political economy of IMF forecasts," Public Choice, Springer, vol. 137(1), pages 145-171, October.
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    More about this item

    Keywords

    COVID-19 pandemic; fiscal stimulus; macro-financial measures; economic policy;
    All these keywords.

    JEL classification:

    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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