Though demand for economic forecasts is strong, their reliability is frequently questioned and scepticism is widespread among the general public regarding the accuracy of any forecast. Granted, forecasters often get it wrong, not least when it comes to foreseeing turning points or crises. But uncertainty is part and parcel of advanced economies. In addition, forecasters themselves consider that they tend to be unduly criticised. They argue that their track record is more respectable than is often alleged, noting that professional forecasts have been proved to be more reliant than the so-called ‘naïve forecasts’ produced by elementary methods. Moreover, accuracy is perhaps not the best criterion to judge the value of forecasts. Indeed, their usefulness may have more to do with the associated diagnoses and policy implications (see Chapter 12).
KeywordsForecast Error Exogenous Variable Forecast Accuracy Mean Absolute Error Economic Forecast
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