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Monday, September 29, 2014

'Why Are Economic Forecasts Wrong So Often?'

At MoneyWatch:

Why are economic forecasts wrong so often?: The Queen of England famously asked why economists failed to foresee the financial crisis in 2008. "Why did nobody notice it?" was her question when she visited the London School of Economics that year.
Economists' failure to accurately predict the economy's course isn't limited to the financial crisis and the Great Recession that followed. Macroeconomic computer models also aren't very useful for predicting how variables such as GDP, employment, interest rates and inflation will evolve over time.
Forecasting most things is fraught with difficulty. See the current dust-up between Nate Silver and Sam Wang over their conflicting predictions about the coming Senate elections. Why is forecasting so hard?
Because so many things can go wrong. For example...

    Posted by on Monday, September 29, 2014 at 08:20 AM in Econometrics, Economics | Permalink  Comments (29)


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