The accuracy of alternative GDP growth forecasts: Do they represent a credible alternative to the official ones?

Issue: 3/2015

Jiří Šindelář

University of Finance and Administration, Prague. Address: Estonská 500, 101 00 Praha 10. Email: Tel.: +420 731 537 207.

The paper deals with the accuracy of the real GDP growth forecasts produced by two Czech non-governmental institutions: the Czech-Moravian Confederation of Trade Unions (CMKOS) and the Czech Banking Association (CBA) in the years 2007-2014 and 2011-2014 respectively. Utilizing a research method composed of simple (AFE), scale-dependent (RMSE) as well as relative (MASE) error measures, we found out that (i) CMKOS predictions achieved a lower forecasting error on average, beginning with a notable overestimation in the first turnover point from growth to decline (2008-2009), yet followed by gradual improvement resulting in superior accuracy over set benchmarks (Ministry of Finance, Czech National Bank, OECD) in later years (2010-2014). The CBA predictions, on the other hand, exhibited (ii) a high level of interconnection with official bodies (MF, CNB), but with overall inferior forecasting accuracy, despite the shorter time frame (2011-2014). Overall, the study suggests that of the two surveyed non-governmental bodies, only CMKOS forecasts represent a viable alternative to the official predictions published by the Ministry of Finance or the Czech National Bank, as CBA forecasts were found to be a less accurate satellite of these bodies.

DOI: 10.1515/revecp-2015-0021
JEL: O47, H68, E66, E37
Keywords: Scale-dependent error measures, Relative error measures, GDP forecast, Czech-Moravian Confederation of Trade Unions, Czech Banking Association, Alternative macroeconomic forecasts


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