Re: RE: Economists surprised???

[Jim Devine <jdevine@xxxxxxxxxxxxxxx>]

Christina & David Romer wrote:
> "Specifically, we ask whether, given commercial forecasts of inflation,
> the Federal Reserve forecasts are useful in predicting inflation. To
> analyze this question, we examine regressions of inflation on commercial
> and Federal Reserve forecasts. We find that the Federal Reserve possesses
> statistically significant and quantitatively important additional
> information. In a typical regression, the coefficient oin the commercial
> forecast is small and insignificant while that on the Federal Reserve
> forecast is substantial and highly significant. This suggests that the
> optimal forecasting strategy of someone with access to both forecasts
> would be to put essentially no weight on the commercial forecast. ...."

Of course, it was precisely the commercial predictions that Clinton invoked
to assuage the Bushlet's fears about recession.


Jim Devine jdevine@xxxxxxx &  http://bellarmine.lmu.edu/~jdevine