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Forecast Accuracy and Monetary Policy

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It has been suggested that the purpose of economic forecasting is to make weather forecasters look good by comparison. Despite their inaccuracies, though, forecasts of the economy must be useful, given the large number of them available and the relatively high cost of producing such information. Indeed, if forecasters can even marginally reduce uncertainty about future business conditions, the savings to business is potentially huge.

It has been suggested that the purpose of economic forecasting is to make weather forecasters look good by comparison. Despite their inaccuracies, though, forecasts of the economy must be useful, given the large number of them available and the relatively high cost of producing such information. Indeed, if forecasters can even marginally reduce uncertainty about future business conditions, the savings to business is potentially huge.


Suggested citation: Bryan, Michael F., and William T. Gavin, 1991. "Forecast Accuracy and Monetary Policy," Federal Reserve Bank of Cleveland, Economic Commentary, 01.01.1991.

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