Are 'unbiased' forecasts really unbiased? Another look at the Fed forecasts

Abstract

This paper reconciles contradictory findings obtained from forecast evaluations: the existence of systematic errors and the failure to reject rationality in the presence of such errors. Systematic errors in one economic state may offset the opposite types of errors in the other state such that the null of rationality is not rejected. A modified test applied to the Fed forecasts shows that the forecasts were ex post biased.Greenbook Forecasts, forecast evaluation, systematic errors