Working Papers

Working Paper 151
Why did we fail to predict GDP during the last cycle? A breakdown of forecast errors for Austria

Martin Schneider and Christian Ragacs

February 11, 2009

 

The opinions are strictly those of the authors and in no way commit the OeNB.


Editorial

This paper proposes an informal taxonomy to break down forecast errors of institutional forecasts. This breakdown is demonstrated for the forecasts of the Oesterreichische Nationalbank (OeNB) for Austrian GDP. The main result is that the largest part of the forecast errors can be explained by erroneous projections of the international environment. Data revisions also substantially contribute to the forecasting error for the forecast of the current year. Domestic exogenous variables play a minor role only. The inclusion of judgement improves the forecasting performance.



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