{ "title": "How Well Do Economists Forecast Recessions?", "publication": "IMF Working Papers, March 5, 2018", "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672", "canonical": "https://www.imf.org/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672", "overlayPath": "/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672/index.md", "summary": "We describe the evolution of forecasts in the run-up to recessions. The GDP forecasts cover 63 countries for the years 1992 to 2014.", "sections": [ { "heading": "Overview", "content": "- Title: How Well Do Economists Forecast Recessions?\n- Authors: Zidong An, João Tovar Jalles, Prakash Loungani\n- Date: March 5, 2018\n- Publication: IMF Working Papers\n- Summary statement: The paper describes the evolution of forecasts in the run-up to recessions, covering GDP forecasts for 63 countries for the years 1992 to 2014, and finds systematic failures to capture the magnitude and timing of recessions and booms." }, { "heading": "Main findings", "content": "- Data coverage:\n - GDP forecasts cover 63 countries for the years 1992 to 2014.\n- Forecast performance in recessions:\n - Forecasters are generally aware that recession years will be different from other years, but they miss the magnitude of the recession by a wide margin until the year is almost over.\n - Forecasts during non-recession years are revised slowly.\n - In recession years, the pace of revision picks up but not sufficiently to avoid large forecast errors.\n- Public vs private forecasts:\n - Forecasts of the private sector and the official sector are virtually identical; thus, both are equally good at missing recessions.\n- Booms and behavioral interpretation:\n - Strong booms are also missed.\n - The results provide suggestive evidence for Nordhaus’ (1987) view that behavioral factors—the reluctance to absorb either good or bad news—play a role in the evolution of forecasts." }, { "heading": "Interpretation and implications", "content": "- Forecast timing and magnitude:\n - Forecasters adjust more during recessions, but adjustments are too slow and too small to reliably predict recession magnitude before the year is nearly complete.\n- Cross-sector similarity:\n - The similarity between private and official forecasts implies common limitations across forecasting communities, not unique to either sector.\n- Behavioral drivers:\n - Missed booms and recessions together point toward behavioral explanations (information rigidity or reluctance to absorb news) as important in understanding forecast dynamics." }, { "heading": "Subject classification and keywords", "content": "- Subject: Economic theory, Production, Production growth, Rational expectations\n- Keywords: bias, comparing recession, efficiency, forecast comparison, forecasted recession, Global, IMF World Economic Outlook, information rigidity, Production growth, Rational expectations, recession, recession episode, recession year, WP\n\n---\n\n Content in this bundle\n\n- How Well Do Economists Forecast Recessions?, WP/18/39, March 2018\n - How Well Do Economists Forecast Recessions?, WP/18/39, March 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n - How Well Do Economists Forecast Recessions?, WP/18/39, March 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672" } ], "bullets": [ "[Markdown version](/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672/index.md)", "[Structured JSON version](/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672/index.json)", "[Bundle manifest](/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672/bundle-manifest.json)", "Authors: Zidong An, João Tovar Jalles, Prakash Loungani", "Published: March 5, 2018", "Series: IMF Working Papers", "Title: How Well Do Economists Forecast Recessions?", "Authors: Zidong An, João Tovar Jalles, Prakash Loungani", "Date: March 5, 2018", "Publication: IMF Working Papers", "Summary statement: The paper describes the evolution of forecasts in the run-up to recessions, covering GDP forecasts for 63 countries for the years 1992 to 2014, and finds systematic failures to capture the magnitude and timing of recessions and booms.", "Data coverage:", "Forecast performance in recessions:", "Public vs private forecasts:", "Booms and behavioral interpretation:", "Forecast timing and magnitude:", "Cross-sector similarity:", "Behavioral drivers:", "Subject: Economic theory, Production, Production growth, Rational expectations", "Keywords: bias, comparing recession, efficiency, forecast comparison, forecasted recession, Global, IMF World Economic Outlook, information rigidity, Production growth, Rational expectations, recession, recession episode, recession year, WP", "**How Well Do Economists Forecast Recessions?, WP/18/39, March 2018**" ], "related": [ { "title": "How Well Do Economists Forecast Recessions?, WP/18/39, March 2018", "role": "document", "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2018/wp1839.pdf", "summary": { "path": "/-/media/files/publications/wp/2018/wp1839.pdf.md", "mime": "text/markdown" }, "binary": { "path": "/-/media/files/publications/wp/2018/wp1839.pdf", "mime": "application/pdf" } } ], "alternates": { "markdown": "/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672/index.md", "json": "/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672/index.json", "bundleManifest": "/en/publications/wp/issues/2018/03/05/how-well-do-economists-forecast-recessions-45672/bundle-manifest.json" }, "generatedAtUtc": "2026-09-18T13:01:01.948Z" }