With the Great Recession that erupted in 2007, the economic forecasting profession’s reputation suffered a serious blow. It may experience further credibility problems as the aftershocks of the worst economic and financial crisis since the 1930s undermine the hopeful forecasts of a self-sustained recovery.
“Yet, economic forecasts will remain in high demand, on the part of policymakers, businesses and households alike”, says Vincent Koen who co-wrote a new book Economic Forecasting and Policy. It provides the tools needed to navigate these treacherous waters, both for producers and for users of forecasts.
“It presents a wide range of approaches, including business cycle analysis, time series methods, macroeconomic models, medium and long-run projections, and fiscal and financial forecasts.”
The book explores the main issues surrounding the use of forecasts, including accuracy and communication challenges. All along, the economic policy implications are highlighted, together with a focus on their financial stability dimension. A tour of the economic data and forecasting institutions is also provided.
“The current chief economist of the IMF and the former chief economists of the OECD and BIS have endorsed the book as a must-read for whoever wants to practice the dark art of forecasting or to understand the numerous forecasts that float around.”