The role of judgement in macroeconomic forecasting

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Abstract
This paper examines the rationale for, and influence of, judgemental adjustments in macroeconomic forecasting, using two particular forecasts for the UK economy recently published by the National Institute of Economic and Social Research and the London Business School. It is found that in some cases such adjustments have a major effect on the forecasts and can also explain some of the differences in the two rival forecasts. However the number of adjustments for which this is true is not great. An implication of these findings is that, if these forecasts can be regarded as typical, then macroeconomic forecasters should be urged to give a reasonable account of the role of judgemental adjustments in their forecasts, particularly since the amount of information which would be required is not likely to be excessive.

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