Introduction:

Fildes & Stekler's (2002) survey of the state of knowledge about the quality of economic forecasts focused primarily on US and UK data. This paper will draw on some of their findings but it will not examine any additional US forecasts. The purpose is to determine whether their results are robust by examining the predictions of other countries. The focus will be on (1) directional errors, (2) the magnitude of the errors made in estimating growth and inflation, (3) whether there were biases and systematic errors, (4) the sources of the errors and (5) whether there has been an improvement in forecasting ability. It appears that few of the papers that have analyzed any of the G7 forecasts have examined all of these issues. A notable exception is a paper coauthored by Ullrich Heilemann, whom we are honoring. However, a number of the papers that are cited here provided data that give us a greater understanding of the forecasting process. Some the forecasts were issued by international organizations such as the OECD and IMF. The others come from institutions or from private forecasters as reported in Consensus Forecasts. The next section examines directional errors followed by a discussion of the magnitude of the quantitative discrepancies. The third section questions whether the accuracy of forecasts has improved. The subsequent sections discuss the existence of bias in the various G7 countries and the sources of the errors. The final section summarizes what we have learned about forecasting in the G7 countries from the evaluation studies that have been summarized here.