Dedicated to the memory of Victor Zarnowitz (3 November 1919–21 February 2009) a great economist, a sceptic on economic forecasting and a good friend to both authors.
Has The Accuracy of Macroeconomic Forecasts for Germany Improved?†
Article first published online: 4 JUN 2012
© 2012 The Authors. German Economic Review © 2012 Verein für Socialpolitik
German Economic Review
Volume 14, Issue 2, pages 235–253, May 2013
How to Cite
Heilemann, U. and Stekler, H. O. (2013), Has The Accuracy of Macroeconomic Forecasts for Germany Improved?. German Economic Review, 14: 235–253. doi: 10.1111/j.1468-0475.2012.00569.x
- Issue published online: 11 MAR 2013
- Article first published online: 4 JUN 2012
- Forecast evaluations;
- macroeconomic forecasting;
- accuracy limits
This study asks whether the accuracy of macroeconomic forecasts for Germany has improved over time. We examine one-year-ahead forecasts of rates of real GDP growth and inflation for the years 1967–2010, by three major German forecasters and the OECD. We find that overall error levels are high but not much different from those of the U.S. and U.K. In the 1980s and 1990s accuracy improved somewhat, but has now returned to its 1970s level, indicating that it reflects the variance of growth and inflation. Benchmark comparisons with these predictions with ex post forecasts of a macroeconometric model indicate that accuracy can be improved, but it will be difficult to achieve.