Uncertainty in Long-Term Economic Forecasts

This study presents ex post evaluation of the accuracy of long-term macroeconomic forecasts presented by economics researchers. The results indicate, first, that the GDP growth and inflation forecasts for the next ten years are biased upward. Second, there are positive correlations between real GDP and TFP growth forecasts and between nominal GDP growth and CPI inflation forecasts, resulting in the same correlations between forecasting errors for these macroeconomic variables. Third, academic researchers' GDP growth forecasts are less upward biased than those of professional forecasters in private institutions. However, the upward bias of academic researchers specializing in macroeconomics and economic growth is larger than those in the other research areas. These results indicate that long-term economic forecasting involves significant uncertainty even for professional economists.

The English version of this paper is 19-E-084.