The Past, Present, and Future of Macroeconomic Forecasting
NBER Working Paper No. 6290
Broadly defined, macroeconomic forecasting is alive and well. Nonstructural forecasting which is based largely on reduced-form correlations, has always been well and continues to" improve. Structural forecasting, which aligns itself with economic theory and hence rises and" falls with theory, receded following the decline of Keynesian theory. In recent years powerful new dynamic stochastic general equilibrium theory has been developed macroeconomic forecasting is poised for resurgence.
Published: Journal of Economic Perspectives, Vol. 12 (1998): 175-192.