Grand Rapids Economic Forecast 2006

Our latest survey forecast for the greater Grand Rapids economy (Kent, Ottawa, Muskegon, and Allegan Counties) was conducted in November 2005. • Business Confidence has suffered a marginal decline and is expected to be flat for 2006 • Employment growth is expected to be very modest, at best 0.5% for 2006 • Overall sales are expected to grow at a rate comparable to last year, around 3% for 2006 • Exports continue to be a bright spot; expected growth is 5% for 200

Are Forecast Updates Progressive?

Many macro-economic forecasts and forecast updates, such as those from the IMF and OECD, typically involve both a model component, which is replicable, as well as intuition (namely, expert knowledge possessed by a forecaster), which is non-replicable. . Learning from previous mistakes can affect both the replicable component of a model as well as intuition. If learning, and hence forecast updates, are progressive, forecast updates should generally become more accurate as the actual value is approached. Otherwise, learning and forecast updates would be neutral. The paper proposes a methodology to test whether macro-economic forecast updates are progressive, where the interaction between model and intuition is explicitly taken into account. The data set for the empirical analysis is for Taiwan, where we have three decades of quarterly data available of forecasts and their updates of two economic fundamentals, namely the inflation rate and real GDP growth rate. The empirical results suggest that the forecast updates for Taiwan are progressive, and that progress can be explained predominantly by improved intuition.Macro-economic forecasts, econometric models, intuition, learning, progressive forecast updates, forecast errors.

Does Age Structure Forecast Economic Growth?

Increases in the proportion of the working age population can yield a "demographic dividend" that enhances the rate of economic growth. We estimate the parameters of an economic growth model with a cross section of countries over the period 1960 to 1980 and investigate whether the inclusion of age structure improves the model's forecasts for the period 1980 to 2000. We find that including age structure improves the forecast, although there is evidence of parameter instability between periods with an unexplained growth slowdown in the second period. We use the model to generate growth forecasts for the period 2000 to 2020.

Does Age Structure Forecast Economic Growth?

High ratios of working age to dependent population can yield a increases the rate of economic growth. We estimate the parameters model with a cross section of countries over the period 1960 to 1980 inclusion of age structure improves the model’s forecasts for the period that including age structure improves the forecast, although there instability between periods with an unexplained growth slowdown the model to generate growth forecasts for the period 2000–2020.Economic Growth, demography, forecast, evaluation, error decomposition

"How Accurate are Government Forecasts of Economic Fundamentals? The Case of Taiwan"

A government's ability to forecast key economic fundamentals accurately can affect business confidence, consumer sentiment, and foreign direct investment, among others. A government forecast based on an econometric model is replicable, whereas one that is not fully based on an econometric model is non-replicable. Governments typically provide non-replicable forecasts (or, expert forecasts) of economic fundamentals, such as the inflation rate and real GDP growth rate. In this paper, we develop a methodology to evaluate non-replicable forecasts. We argue that in order to do so, one needs to retrieve from the non-replicable forecast its replicable component, and that it is the difference in accuracy between these two that matters. An empirical example to forecast economic fundamentals for Taiwan shows the relevance of the proposed methodological approach. Our main finding is that it is the undocumented knowledge of the Taiwanese government that reduces forecast errors substantially.

How Accurate are Government Forecasts of Economic Fundamentals? The Case of Taiwan

A government’s ability to forecast key economic fundamentals accurately can affect business confidence, consumer sentiment, and foreign direct investment, among others. A government forecast based on an econometric model is replicable, whereas one that is not fully based on an econometric model is non-replicable. Governments typically provide non-replicable forecasts (or, expert forecasts) of economic fundamentals, such as the inflation rate and real GDP growth rate. In this paper, we develop a methodology to evaluate non-replicable forecasts. We argue that in order to do so, one needs to retrieve from the non-replicable forecast its replicable component, and that it is the difference in accuracy between these two that matters. An empirical example to forecast economic fundamentals for Taiwan shows the relevance of the proposed methodological approach. Our main finding is that it is the undocumented knowledge of the Taiwanese government that reduces forecast errors substantially.Government forecasts; generated regressors; replicable government forecasts; non- replicable government forecasts; initial forecasts; revised forecasts

Are Forecast Updates Progressive?

Macro-economic forecasts typically involve both a model component, which is replicable, as well as intuition, which is non-replicable. Intuition is expert knowledge possessed by a forecaster. If forecast updates are progressive, forecast updates should become more accurate, on average, as the actual value is approached. Otherwise, forecast updates would be neutral. The paper proposes a methodology to test whether forecast updates are progressive and whether econometric models are useful in updating forecasts. The data set for the empirical analysis are for Taiwan, where we have three decades of quarterly data available of forecasts and updates of the inflation rate and real GDP growth rate. The actual series for both the inflation rate and the real GDP growth rate are always released by the government one quarter after the release of the revised forecast, and the actual values are not revised after they have been released. Our empirical results suggest that the forecast updates for Taiwan are progressive, and can be explained predominantly by intuition. Additionally, the one-, two- and three-quarter forecast errors are predictable using publicly available information for both the inflation rate and real GDP growth rate, which suggests that the forecasts can be improved.econometric models;intuition;actual value;forecast errors;initial forecast;macro-economic forecasts;primary forecast;progressive forecast updates;revised forecast

Time to Gird for Rough Times: Forecast Commentary, part 2

U.S. economic forecast, economy, forecast, U.S., indicators, employment, housing, retail, consumer confidence, auto sales, personal income, spending, business investment, trade, interest rates

Forecasting the role of public expenditure in economic growth Using DEA-neural network approach

This paper integrates data envelopment analysis (DEA) and artificial neural networks (ANN) to forecast the role of public expenditure in economic growth in OCDE countries. The results show that this approach is a powerful and appropriate method to forecast this role. DEA method allows us to develop a neutral evaluation, unbiased a priori by any type of criteria, of the proportions in which the goal of productive spending is pursued, for any expenditure. Then we apply ANN to forecast economic growth by using input data taken at frontier. At the end of the DEA-ANN chain, prediction-power tests appear positive: best structures of multiple hidden layers indicate more ability to forecast according to best structures of single hidden layer but the difference between those is not much.DEA method; Economic growth; Public expenditure; Artificial neural network; OCDE countries

Are Forecast Updates Progressive?

Macro-economic forecasts typically involve both a model component, which is replicable, as well as intuition, which is non-replicable. Intuition is expert knowledge possessed by a forecaster. If forecast updates are progressive, forecast updates should become more accurate, on average, as the actual value is approached. Otherwise, forecast updates would be neutral. The paper proposes a methodology to test whether forecast updates are progressive and whether econometric models are useful in updating forecasts. The data set for the empirical analysis are for Taiwan, where we have three decades of quarterly data available of forecasts and updates of the inflation rate and real GDP growth rate. The actual series for both the inflation rate and the real GDP growth rate are always released by the government one quarter after the release of the revised forecast, and the actual values are not revised after they have been released. Our empirical results suggest that the forecast updates for Taiwan are progressive, and can be explained predominantly by intuition. Additionally, the one-, two- and three-quarter forecast errors are predictable using publicly available information for both the inflation rate and real GDP growth rate, which suggests that the forecasts can be improved.Macro-economic forecasts; econometric models; intuition; initial forecast; primary forecast; revised forecast; actual value; progressive forecast updates; forecast errors