Abstract Faced with an uncertain future, forecasters often rely on textbook relationships to build a coherent narrative for their macroeconomic forecasts. We focus on two cornerstones of modern macroeconomics –… Click to show full abstract
Abstract Faced with an uncertain future, forecasters often rely on textbook relationships to build a coherent narrative for their macroeconomic forecasts. We focus on two cornerstones of modern macroeconomics – Okun’s law and the Phillips curve – and examine whether or not professionals forecast in a way that is consistent with these. Using microdata from the US, Euro Area, and UK surveys of professional forecasters, we examine forecasts over the period 1981-2017 at the level of the individual and across different time horizons. Our findings show that the majority of forecasters produce their forecasts in a manner that is consistent with macroeconomic theory.
               
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