6/19/2019

Macroeconomic Forecasting Seems Pretty Hopeless

"Forecasts of interest rates appear pretty awful, and this is a market where vast profits are at stake so there are big incentives to get it right. I’ve noted (here and here) that economists are also lousy at predicting economic growth.

What are the policy implications? The economy is too complex and uncertain for even the best economists to predict, so politicians stand no chance. It seems unlikely that political schemes from Washington to manage and manipulate our future economy would work."