Has the Accuracy of German Macroeconomic Forecasts Improved?

The major focus of this paper is to determine whether the accuracy of German macroeconomic forecasts has improved over time. We examine one-year-ahead forecasts of real GDP and inflation for the years 1967 to 2008 made by three major German forecasting groups and the OECD. We examine the accuracy of the forecasts over the entire period and in four sub-periods. We conclude that, with some exceptions, the errors of the German forecasters were similar to those of their U.S. and U.K. counterparts. While the absolute size of the forecast errors has declined, this is not the case for relative accuracy. A benchmark comparison of these predictions with the ex post forecasts of a macroeconometric model indicates that the quality of the growth forecasts can be improved but that the expected increase in accuracy may not be substantial.