Interpreting and evaluating CESIfo's World Economic Survey directional forecasts

Using the Carlson and Parkin (1975) framework and employing the Pesaran–Timmermann (1992) Predictive Failure statistic, we evaluate several consensus forecast series from CESIfo's World Economic Survey. Several issues are examined related to interpreting qualitative survey responses. We define...

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Bibliographic Details
Published in:Economic modelling 2014-02, Vol.38, p.6-11
Main Authors: Hutson, Mark, Joutz, Fred, Stekler, Herman
Format: Article
Language:English
Subjects:
Directional forecasts
Economic conditions
Economic forecasts
Evaluating surveys
Global economy
Modelling
Polls & surveys
Studies
Survey analysis
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Summary:Using the Carlson and Parkin (1975) framework and employing the Pesaran–Timmermann (1992) Predictive Failure statistic, we evaluate several consensus forecast series from CESIfo's World Economic Survey. Several issues are examined related to interpreting qualitative survey responses. We define what an “about the same” response implies across different economic variables, the value of agreement across the forecast panel, and how to maximize the signal value provided by the survey. We find that survey respondents provide statistically significant directional forecasts or signals. •We evaluate CESIfo's directional US forecasts using contingency tables.•There are technical issues involved in evaluating the survey's quantitative values.•The surveys accurately describe the US economy's current situation.
ISSN:0264-9993
1873-6122
DOI:10.1016/j.econmod.2013.11.032