Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/87462
Authors: 
Chang, Chia-Lin
Franses, Philip Hans
McAleer, Michael
Year of Publication: 
2013
Series/Report no.: 
Tinbergen Institute Discussion Paper 13-049/III
Abstract: 
Many macroeconomic forecasts and forecast updates like those from IMF and OECD typically involve both a model component, which is replicable, as well as intuition, which is non-replicable. Intuition is expert knowledge possessed by a forecaster. If forecast updates are progressive, forecast updates should become more accurate, on average, as the actual value is approached. Otherwise, forecast updates would be neutral. The paper proposes a methodology to test whether macroeconomic forecast updates are progressive, where the interaction between model and intuition is explicitly taken into account. The data set for the empirical analysis is for Taiwan, where we have three decades of quarterly data available of forecasts and their updates of the inflation rate and real GDP growth rate. Our empirical results suggest that the forecast updates for Taiwan are progressive, and that progress can be explained predominantly by improved intuition.
Subjects: 
Macroeconomic forecasts
econometric models
intuition
progressive forecast updates
forecast errors
JEL: 
C53
C22
E27
E37
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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