Macroeconomic forecasts are frequently produced, published, discussed and used. The
formal evaluation of such forecasts has a long research history. Recently, a new angle to
the evaluation of forecasts has been addressed, and in this review we analyse some recent
developments from that perspective. The literature on forecast evaluation predominantly
assumes that macroeconomic forecasts are generated from econometric models. In
practice, however, most macroeconomic forecasts, such as those from the IMF, World
Bank, OECD, Federal Reserve Board, Federal Open Market Committee (FOMC) and the
ECB, are based on econometric model forecasts as well as on human intuition. This
seemingly inevitable combination renders most of these forecasts biased and, as such,
their evaluation becomes non-standard. In this review, we consider the evaluation of two
forecasts in which: (i) the two forecasts are generated from two distinct econometric
models; (ii) one forecast is generated from an econometric model and the other is
obtained as a combination of a model, the other forecast, and intuition; and (iii) the two
forecasts are generated from two distinct combinations of different models and intuition.
It is shown that alternative tools are needed to compare and evaluate the forecasts in each
of these three situations. These alternative techniques are illustrated by comparing the
forecasts from the Federal Reserve Board and the FOMC on inflation, unemployment and
real GDP growth.
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