Are macro forecasters paid to make good forecasts?
2009-11-24 · Original WordPress address
I hope not. In the 1990's, Macroeconomic Advisors GDP forecasts performed worse than random walk forecasts (basically guessing next year's GDP will be the same as last year's) in 6 out of 9 years (Fed WP, Anderson 1998). No sense paying someone to give you worse answers than a quick glance on a government website would give.
Brad Delong says we should believe these people's forecasts because they get paid to make them. MA's performance, on the other hand, suggest people pay them for services other than their GDP point estimates.