OECD Forecasts During and After the Financial Crisis

Pain, Nigel; Lewis, Christine; Dang, Thai-Thanh; Jin, Yosuke; Richardson, Pete

doi:10.1787/5jz73l1qw1s1-en

Cited by 13 publications

(25 citation statements)

References 27 publications

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“…Overall, the size and profile of the OECD projection errors are very similar to the errors A comparison of the OECD growth projections and consensus forecasts for G7 countries over a longer period reveals similar patterns (Pain et al, 2014), with little significant difference May projection for same year in the overall accuracy of the OECD and consensus forecasts over the past two decades.…”

Section: Comparisons With Other Forecastersmentioning

confidence: 60%

“…Statistical tests of the properties of the OECD country growth projections are summarised in Pain et al (2014), though the results need to be viewed with some caution, given the small sample size available. The main findings include:…”

Section: Forecast Evaluation Testsmentioning

confidence: 99%

“…Changes in the OECD composite leading indicators (CLIs) ahead of May 2008 were negatively correlated with the errors in the growth projections made at that time, with the CLIs continuing to improve in some countries even at the point at which GDP was past its peak (see Appendix 7 in Pain et al, 2014). This suggests that the usual relationship between many high-frequency variables -including activity, labour market and survey data -broke down during this period.…”

Section: Factors Correlated With Errors Over the Whole Period And Durmentioning

confidence: 99%

“…Section 2 briefly reviews forecasting and risk assessment practices before the onset of the financial crisis and then discusses the properties of the errors made for the 2007-12 period. (The focus is on the period of the crisis and the years that immediately followed because this paper is based on a project covering those years (Pain, et al, 2014); 2013 is not reported in the paper but revisions to the initial projections were generally comparatively small.) Section 3 assesses whether OECD projection errors in the 2007-12 period, or the downturn and recovery sub-periods, are systematically linked to pre-crisis conditions, structural conditions, and policy assumptions.…”

Section: Introductionmentioning

confidence: 99%

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Lessons from OECD forecasts during and after the financial crisis

Lewis¹,

Pain²

2014

OECD Journal: Economic Studies

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This paper assesses the OECD's projections for GDP growth and inflation during the global financial crisis and recovery, focusing on lessons that can be learned. Growth was repeatedly overestimated in the projections, which failed to anticipate the extent of the slowdown and later the weak pace of the recovery. Similar errors were made by many other forecasters. At the same time, inflation was stronger than expected on average. Analysis of the growth errors shows that the OECD projections in the crisis years were larger in countries with more international trade openness and greater presence of foreign banks. In the recovery, there is little evidence that an underestimate of the impact of fiscal consolidation contributed significantly to forecast errors. Instead, the repeated conditioning assumption that the euro area crisis would stabilise or ease played an important role, with growth weaker than projected in European countries where bond spreads were higher than had been assumed. But placing these errors in a historical context illustrates that the errors were not without precedent: similar-sized errors were made in the first oil price shock of the 1970s. In response to the challenges encountered in forecasting in recent years and the lessons learnt, the OECD and other international organisations have sought to improve their forecasting techniques and procedures, to improve their ability to monitor near-term developments and to better account for international linkages and financial market developments.

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Section: Comparisons With Other Forecastersmentioning

confidence: 60%

Section: Forecast Evaluation Testsmentioning

confidence: 99%

Section: Factors Correlated With Errors Over the Whole Period And Durmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Lessons from OECD forecasts during and after the financial crisis

Lewis¹,

Pain²

2014

OECD Journal: Economic Studies

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show abstract

“…As a result, the simultaneous fiscal adjustment across the euro area, including in core countries, is considered to have made the recession deeper and longer (Baldwin et al, 2015). Within individual countries, the impact of consolidation on output, which tends to be larger in downturns and for spending cuts, may also have been underestimated, though the evidence is not fully conclusive (Blanchard and Leigh, 2013;Pain et al, 2014). Furthermore, shifts in expenditure composition have generally been detrimental to equity and longerterm growth, especially in the countries carrying out the largest fiscal adjustments.…”

Section: Revenue Increases Expenditure Cuts Totalmentioning

confidence: 99%