Why do forecasts differ

Quarterly Bulletin 1982 Q1
Published on 01 March 1982

Note of a special study for the Bank's Panel of Academic Consultants.

In association with the Social Science Research Council (SSRC), the Bank recently commissioned a study, by Professor M J Artis, of the reasons underlying divergences between forecasts produced by different forecasting bodies.

The public now has available a large number of forecasts of the UK economy, which sometimes differ fairly widely. Publication of the results in summary form leaves the reader with little means of judging the underlying points of difference. The present exercise was intended as an experiment to see how much light could be shed on the reasons for forecasting differences, and how useful to users of the forecasts any additional information would be in assessing the forecasts and in forming their own judgment as to future probabilities. The SSRC, for its part, is concerned to encourage greater critical discussion of the methods used by the various forecasting teams that receive financial support from the Council; and is contemplating setting up a centre to encourage more systematic comparative work by co-operation between the teams. The SSRC therefore wished to participate equally in the present exercise as being likely to have a useful bearing on the work of the new centre.

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