Can the IMF's Medium-Term Growth Projections Be Improved?

October 1, 2004

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Format: Chicago

Juan Zalduendo, and Catia Batista. Can the IMF's Medium-Term Growth Projections Be Improved?, (USA: International Monetary Fund, 2004) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Numerous reports have noted that the IMF's medium-term growth projections are overly optimistic, raising questions as to how these can be improved. To this end, we estimate a growth model and examine its out-of-sample forecasting properties relative to those of IMF projections. The model's projections outperform those of the IMF in all regions and among most income groups-projections are less biased (one-quarter of the IMF bias) and have smaller standard errors (20 percent lower root mean squared errors) even after controlling for the IMF's macroeconomic assumptions. The paper does not attempt to address the criticisms that have been leveled against the empirical growth literature, but the results suggest that benefits can be derived from bringing systematic analysis to bear on cross-country information.

Subject: Fiscal policy, Fiscal stance, Human capital, Inflation, Labor, National accounts, Personal income, Prices

Keywords: Benchmark country, Coefficient estimate, Country, Fiscal stance, Forecasting, Growth, Growth rate, Human capital, IMF staff, IMF staff medium-term projection, IMF's work, Inflation, Inflation country, Inflation level, Middle East, Model estimation, One-time factor, Personal income, State condition, Terms of trade growth rate, Threshold effect, WP

Publication Details

Pages:

31
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/203
Stock No:

WPIEA2032004
ISBN:

9781451874488
ISSN:

1018-5941

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