Comments on: Looking Backwards at the FOMC Meeting http://alephblog.com/2007/11/01/looking-backwards-at-the-fomc-meeting/ Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control Thu, 18 Mar 2010 05:20:57 -0400 http://wordpress.org/?v=2.8.4 hourly 1 By: Jeff http://alephblog.com/2007/11/01/looking-backwards-at-the-fomc-meeting/comment-page-1/#comment-7998 Jeff Fri, 02 Nov 2007 21:00:06 +0000 http://alephblog.com/2007/11/01/looking-backwards-at-the-fomc-meeting/#comment-7998 Thanks, David. Not much is learned in conversations where everyone is in complete agreement. I think it would be interesting if those who did a critique of forecasting actually tried it themselves for a while. It could be on anything, but there would have to be enough cases for them to reach a personal verdict. It would be especially good if the thing to be predicted had about a 20% chance of happening! I like the ECRI and always pay attention to their comments, but I am not sure there are enough comparable recession cases to form any conclusions. Thanks, David.

Not much is learned in conversations where everyone is in complete agreement.

I think it would be interesting if those who did a critique of forecasting actually tried it themselves for a while. It could be on anything, but there would have to be enough cases for them to reach a personal verdict. It would be especially good if the thing to be predicted had about a 20% chance of happening!

I like the ECRI and always pay attention to their comments, but I am not sure there are enough comparable recession cases to form any conclusions.

]]> By: RB http://alephblog.com/2007/11/01/looking-backwards-at-the-fomc-meeting/comment-page-1/#comment-7824 RB Thu, 01 Nov 2007 17:14:41 +0000 http://alephblog.com/2007/11/01/looking-backwards-at-the-fomc-meeting/#comment-7824 ECRI has said that the one thing that could mess up their predictive ability is if policy-makers act based on their forecasts. Consensus forecasts are probably not useful for predicting GDP, but the ECRI approach of calling turning points appears to be more achievable. Since the S&P500 is one of their leading indicators and they need all leading indicators to turn down for a recession call, that doesn't mean you can necessarily profit off their recession calls though. ---- QUESTIONER: I'm Prakash Loungani of the IMF. Isn't there a danger that you're sowing the seeds of your own failure? As your work becomes more known, each time you say there's a danger of recession, everybody will start acting on your information and advice and what you predict will then not happen. MR. BANERJI: Certainly in theory self-falsifying prophecy is possible. But I think we have a very long way to go before people are following us that closely. Most people will not do as we suggest. At least for the foreseeable future I don't see that risk very much. I think that risk is more likely to the extent that policymakers follow what we are looking at, because they are in a position to take preemptive steps to avert the very outcome that we may be predicting. That could ruin our record, but that would be okay with us. So I think for the time being, it is really not as much of a risk. ----- http://www.imf.org/external/np/tr/2005/tr062305.htm ECRI has said that the one thing that could mess up their predictive ability is if policy-makers act based on their forecasts. Consensus forecasts are probably not useful for predicting GDP, but the ECRI approach of calling turning points appears to be more achievable. Since the S&P500 is one of their leading indicators and they need all leading indicators to turn down for a recession call, that doesn’t mean you can necessarily profit off their recession calls though.

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QUESTIONER: I’m Prakash Loungani of the IMF. Isn’t there a danger that you’re sowing the seeds of your own failure? As your work becomes more known, each time you say there’s a danger of recession, everybody will start acting on your information and advice and what you predict will then not happen.

MR. BANERJI: Certainly in theory self-falsifying prophecy is possible. But I think we have a very long way to go before people are following us that closely. Most people will not do as we suggest. At least for the foreseeable future I don’t see that risk very much. I think that risk is more likely to the extent that policymakers follow what we are looking at, because they are in a position to take preemptive steps to avert the very outcome that we may be predicting. That could ruin our record, but that would be okay with us. So I think for the time being, it is really not as much of a risk.

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http://www.imf.org/external/np/tr/2005/tr062305.htm

]]> By: PhDmom http://alephblog.com/2007/11/01/looking-backwards-at-the-fomc-meeting/comment-page-1/#comment-7806 PhDmom Thu, 01 Nov 2007 15:02:08 +0000 http://alephblog.com/2007/11/01/looking-backwards-at-the-fomc-meeting/#comment-7806 although this is the day that I was born, upon a change in character came a change in the name of the day... Happy Reformation day to you too. although this is the day that I was born, upon a change in character came a change in the name of the day… Happy Reformation day to you too.

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