BoE economists hunt ‘driving forces’ of forecast errors
“Systematic” study of mistakes finds wage growth and expectations could have been modelled better
Bank of England (BoE) economists say they have developed a “systematic approach” towards using past forecasting errors to make better predictions about the future state of the economy.
Derrick Kanngiesser and Tim Willems collected data on BoE forecasts going back to the formation of the monetary policy committee (MPC) in 1997. For their analysis, they assessed forecasts back to 2011, when the current modelling framework was adopted, and tested them for accuracy and bias.
The economists find that
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