{
  "title": "Optimism Bias in Growth Forecasts—The Role of Planned Policy Adjustments",
  "publication": "IMF Working Papers, November 8, 2020",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804",
  "overlayPath": "/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804/index.md",
  "summary": "Are IMF growth forecasts systematically optimistic? And if so, what is the role of planned policy adjustments on this outcome? Are program forecasts as biased as surveillance forecasts?",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Research question: Are IMF growth forecasts systematically optimistic? What is the role of planned policy adjustments on this outcome? Are program forecasts as biased as surveillance forecasts?\n- Approach: Analysis using a comprehensive database on IMF forecasts of economic growth in surveillance and program cases during 2003–2017.\n- Key context: Examination of surveillance and program forecasts, including IMF non-concessional, non-precautionary financial arrangements."
    },
    {
      "heading": "Data and scope",
      "content": "- Sample period: 2003–2017\n- Publication: IMF Working Papers, Working Paper No. 2020/229\n- Pages: 25\n- Issue: 229\n- Volume: 2020\n- DOI: https://doi.org/10.5089/9781513560373.001\n- Authors: Kareem Ismail, Roberto Perrelli, Jessie Yang\n- Date: November 8, 2020\n- ISBN: 9781513560373\n- ISSN: 1018-5941"
    },
    {
      "heading": "Key findings",
      "content": "- Large planned fiscal and external adjustments are associated with optimistic growth projections.\n- There are significant non-linearities for both program and surveillance cases.\n- Specific evidence: Larger planned fiscal adjustment is associated with higher growth optimism in IMF non-concessional, non-precautionary financial arrangements.\n- Time pattern: The tendency for optimism has persisted in the period after the Global Financial Crisis.\n- Policy linkage: There is a strong correlation between the magnitude of the optimism and expected fiscal consolidation, which signals caution for post-COVID IMF projections as countries embark on fiscal adjustment."
    },
    {
      "heading": "Subject areas and keywords",
      "content": "- Subject: Fiscal consolidation, Fiscal multipliers, GDP forecasting, Global financial crisis of 2008-2009, Oil prices\n- Keywords: Fiscal adjustment, forecast error, IMF mission, IMF program document, IMF team, IMF-supported programs, optimism bias, optimism bias., policy adjustment, WP"
    },
    {
      "heading": "Policy implications and cautions",
      "content": "- Planned fiscal consolidation may be correlated with optimistic growth forecasts; reliance on large planned adjustments could bias projected growth upward.\n- The persistence of optimism after the Global Financial Crisis suggests vigilance is needed when interpreting projections tied to substantial policy adjustments.\n- The strong correlation between optimism magnitude and expected fiscal consolidation provides a cautionary signal for post-COVID projections as countries implement fiscal adjustments.\n\nOptimism Bias in Growth Forecasts—The Role of Planned Policy Adjustments; IMF Working Paper No. 2020/229; https://www.imf.org/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804/bundle-manifest.json)",
    "Authors: Kareem Ismail, Roberto Perrelli, Jessie Yang",
    "Published: November 8, 2020",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513560373.001",
    "Research question: Are IMF growth forecasts systematically optimistic? What is the role of planned policy adjustments on this outcome? Are program forecasts as biased as surveillance forecasts?",
    "Approach: Analysis using a comprehensive database on IMF forecasts of economic growth in surveillance and program cases during 2003–2017.",
    "Key context: Examination of surveillance and program forecasts, including IMF non-concessional, non-precautionary financial arrangements.",
    "Sample period: 2003–2017",
    "Publication: IMF Working Papers, Working Paper No. 2020/229",
    "Pages: 25",
    "Issue: 229",
    "Volume: 2020",
    "DOI: https://doi.org/10.5089/9781513560373.001",
    "Authors: Kareem Ismail, Roberto Perrelli, Jessie Yang",
    "Date: November 8, 2020",
    "ISBN: 9781513560373",
    "ISSN: 1018-5941",
    "Large planned fiscal and external adjustments are associated with optimistic growth projections.",
    "There are significant non-linearities for both program and surveillance cases.",
    "Specific evidence: Larger planned fiscal adjustment is associated with higher growth optimism in IMF non-concessional, non-precautionary financial arrangements.",
    "Time pattern: The tendency for optimism has persisted in the period after the Global Financial Crisis.",
    "Policy linkage: There is a strong correlation between the magnitude of the optimism and expected fiscal consolidation, which signals caution for post-COVID IMF projections as countries embark on fiscal adjustment.",
    "Subject: Fiscal consolidation, Fiscal multipliers, GDP forecasting, Global financial crisis of 2008-2009, Oil prices",
    "Keywords: Fiscal adjustment, forecast error, IMF mission, IMF program document, IMF team, IMF-supported programs, optimism bias, optimism bias., policy adjustment, WP",
    "Planned fiscal consolidation may be correlated with optimistic growth forecasts; reliance on large planned adjustments could bias projected growth upward.",
    "The persistence of optimism after the Global Financial Crisis suggests vigilance is needed when interpreting projections tied to substantial policy adjustments.",
    "The strong correlation between optimism magnitude and expected fiscal consolidation provides a cautionary signal for post-COVID projections as countries implement fiscal adjustments.",
    "**Working Paper**"
  ],
  "related": [
    {
      "title": "Working Paper",
      "role": "paper",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2020/english/wpiea2020229-print-pdf.pdf",
      "summary": {
        "path": "/-/media/files/publications/wp/2020/english/wpiea2020229-print-pdf.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/wp/2020/english/wpiea2020229-print-pdf.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804/index.md",
    "json": "/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804/index.json",
    "bundleManifest": "/en/publications/wp/issues/2020/11/08/optimism-bias-in-growth-forecasts-the-role-of-planned-policy-adjustments-49804/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-16T18:27:11.833Z"
}