Blackwell Reference Online

Extract

Any complete account of “forecasting for policy” could be formidably long. There are an enormous number of economic policy issues that require a forecast. For example, the effects of changes in taxes and tariffs upon output and employment, the impact of legislation relating to retirement incomes upon savings behavior, questions relating to variations in regional growth rates and even the setting of greenhouse emission targets. This diversity is naturally associated with a corresponding diversity in what is forecast, the interval of time between which successive forecasts must be made, the nature of the association between those making forecasts and the policy-makers, and the forecasting methods that are deemed to be most suitable. Contemplating such a list, it is clear that we need to narrow the focus considerably in order to make the topic manageable. Perhaps the one thing about which there may be agreement is that forecasts, whether explicit or implicit, are at the heart of policy ( Budd, 1999 ), while the methods for making a forecast often engender much less agreement. Given both our own experiences, interests, and expertise, and the fact that it is probably macroeconomic forecasts that feature most prominently in public discussion, it is natural that we concentrate upon that strand. Even with such a constraint, there is still too much variety, as macroeconomic policy resides ... log in or subscribe to read full text