Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/172904
Authors: 
Higgins, Patrick
Zha, Tao
Zhong, Karen
Year of Publication: 
2016
Series/Report no.: 
Working Paper 2016-7
Abstract: 
Although macroeconomic forecasting forms an integral part of the policymaking process, there has been a serious lack of rigorous and systematic research in the evaluation of out-of-sample modelbased forecasts of China's real gross domestic product (GDP) growth and consumer price index inflation. This paper fills this research gap by providing a replicable forecasting model that beats a host of other competing models when measured by root mean square errors, especially over long-run forecast horizons. The model is shown to be capable of predicting turning points and usable for policy analysis under different scenarios. It predicts that China's future GDP growth will be of an L-shape rather than a U-shape.
Subjects: 
out of sample
policy projections
scenario analysis
probability bands
density forecasts
random walk
Bayesian priors
JEL: 
E10
E40
C53
Document Type: 
Working Paper

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