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...
| Egile Nagusiak: | , |
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| Formatua: | Working paper |
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University of Oxford
2009
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| _version_ | 1826294596333731840 |
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| 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 | 2024-03-07T03:48:06Z |
| format | Working paper |
| id | oxford-uuid:c038bae3-2ae3-4a2d-8567-b9c21648e00b |
| institution | University of Oxford |
| last_indexed | 2024-03-07T03:48:06Z |
| publishDate | 2009 |
| publisher | University of Oxford |
| record_format | dspace |
| spelling | oxford-uuid:c038bae3-2ae3-4a2d-8567-b9c21648e00b2022-03-27T05:53:02ZA defence of the FOMCWorking paperhttp://purl.org/coar/resource_type/c_8042uuid:c038bae3-2ae3-4a2d-8567-b9c21648e00bBulk import via SwordSymplectic ElementsUniversity of Oxford2009Ellison, 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 |