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A defence of the FOMC.

Abstract:

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 interpretat...

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Martin Ellison More by this author
Thomas J. Sargent More by this author
Volume:
457
Series:
Discussion paper series
Publication date:
2009-10-05
URN:
uuid:11802978-c355-41af-a6f7-9d78e97e5b8e
Local pid:
oai:economics.ouls.ox.ac.uk:14263
Language:
English

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