A defence of the FOMC.
We defend the forecasting performance of the FOMC from the recent criticism of Christina and David Romer. Our argument is that the FOMC forecasts a worst-case scenario that it uses to design decisions that will work well enough (are robust) despite possible misspecification of its model. Because t...
| Main Authors: | , |
|---|---|
| Format: | Working paper |
| Language: | English |
| Published: |
Department of Economics (University of Oxford)
2009
|
| _version_ | 1797054274705817600 |
|---|---|
| author | Ellison, M Sargent, T |
| author_facet | Ellison, M Sargent, T |
| author_sort | Ellison, M |
| collection | OXFORD |
| description | We defend the forecasting performance of the FOMC from the recent criticism of Christina and David Romer. Our argument is that the FOMC forecasts a worst-case scenario that it uses to design decisions that will work well enough (are robust) despite possible misspecification of its model. Because these FOMC forecasts are not predictions of what the FOMC expects to occur under its model, it is inappropriate to compare their performance in a horse race against other forecasts. Our interpretation of the FOMC as a robust policymaker can explain all the findings of the Romers and rationalises differences between FOMC forecasts and forecasts published in the Greenbook by the staff of the Federal Reserve System. |
| first_indexed | 2024-03-06T18:54:55Z |
| format | Working paper |
| id | oxford-uuid:11802978-c355-41af-a6f7-9d78e97e5b8e |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-06T18:54:55Z |
| publishDate | 2009 |
| publisher | Department of Economics (University of Oxford) |
| record_format | dspace |
| spelling | oxford-uuid:11802978-c355-41af-a6f7-9d78e97e5b8e2022-03-26T10:02:37ZA defence of the FOMC.Working paperhttp://purl.org/coar/resource_type/c_8042uuid:11802978-c355-41af-a6f7-9d78e97e5b8eEnglishDepartment of Economics - ePrintsDepartment of Economics (University of Oxford)2009Ellison, MSargent, TWe defend the forecasting performance of the FOMC from the recent criticism of Christina and David Romer. Our argument is that the FOMC forecasts a worst-case scenario that it uses to design decisions that will work well enough (are robust) despite possible misspecification of its model. Because these FOMC forecasts are not predictions of what the FOMC expects to occur under its model, it is inappropriate to compare their performance in a horse race against other forecasts. Our interpretation of the FOMC as a robust policymaker can explain all the findings of the Romers and rationalises differences between FOMC forecasts and forecasts published in the Greenbook by the staff of the Federal Reserve System. |
| spellingShingle | Ellison, M Sargent, T A defence of the FOMC. |
| title | A defence of the FOMC. |
| title_full | A defence of the FOMC. |
| title_fullStr | A defence of the FOMC. |
| title_full_unstemmed | A defence of the FOMC. |
| title_short | A defence of the FOMC. |
| title_sort | defence of the fomc |
| work_keys_str_mv | AT ellisonm adefenceofthefomc AT sargentt adefenceofthefomc AT ellisonm defenceofthefomc AT sargentt defenceofthefomc |