Risks and Accuracy

Abstract

While there is always a demand for economic forecasts, their reliability is frequently questioned and scepticism is widespread among the broader 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 the complex economies of the twenty-first century. In addition, the forecasters themselves consider that they tend to be unduly criticized. 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 using elementary methods. Moreover, accuracy is perhaps not the best criterion against which to judge the value of forecasts. Indeed, their usefulness may have more to do with the associated diagnoses and policy implications.