Institutional macroeconomic forecasting performance of the UK economy

Abstract

The accuracy of short-run macroeconomic forecasts for the UK economy is analysed by examining institutional, human capital and model-based factors. It is found that members of the Chancellor's panel of independent forecasters have a superior performance than other institutions, whilst the higher education sector and research/consultancy organizations have detrimental records. Additionally, non-monotonic relationships are found for the number of economists contributing to the forecast and the number of equations within the model. Moreover, with respect to the mean number of these factors currently employed by organizations in the sample, economies of scale exist in forecast accuracy. However, the attainment of a doctorate and the number of variables utilized reduce forecast accuracy.