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Macroeconomics Forecasting Essay

1294 words - 5 pages

Macroeconomics ForecastTable of ContentsI. INTRODUCTION / PURPOSE: 3II FORECASTING INSTITUTIONS 4III COMPARE MACROECONOMIC FORECASTS 5IV ORGANIZATION RECOMMENDATIONS / CONCLUSION 8V REFERENCES 9I. Introduction / Purpose:Macroeconomic forecasts are traditionally stated as point estimates for one or several periods ahead. They are used extensively in industry and government.The purpose of this paper is to compare and contrast macroeconomic forecasts prepared by the following financial institutions.* Congressional Budget Office (CBO)* Office of the Management and Budget (OMB)* Research Department - Federal Reserve Bank of PhiladelphiaThe following individual forecasts are compared:* Nominal GDP* Real GDP (Percentage Change)* GDP Price Index (Percentage Change)* Consumer Price Index (Percentage Change)* Unemployment Rate (Percent)* Three Month Treasury Bill Rate (Percent)* Ten Year Treasury Note Rate (Percent)II Forecasting InstitutionsCongressional Budget Office (CBO)The Congressional Budget and Impoundment Control Act of 1974 created the Congressional Budget Office (CBO). CBO's mission is to provide the Congress with the objective, timely, nonpartisan analyses needed for economic and budget decisions and with the information and estimates required for the Congressional budget process.CBO is the only part of the legislative branch whose mandate includes making economic forecasts and projections. Its forecasts cover 18 to 24 months and involve the major economic variables--gross domestic product (GDP), unemployment, inflation, and interest rates. Further projections are extended out to 10 years. CBO does not attempt to forecast cyclical fluctuations in the economy more than two years ahead; its longer-term projections are based on trends in the labor force, productivity, and saving. In preparing its forecasts, CBO examines and analyzes recent economic developments and consults the major econometric models and commercial economic forecasting services. It also relies on the advice of a distinguished panel of advisers.Usually, CBO's forecasts are fairly close to the consensus of private forecasters. CBO regularly publishes an evaluation of its economic forecasting record. (CBO)Office of the Management and Budget (OMB)Office of the Management and Budget (OMB) is a part of the federal government. OMB, working cooperatively with Federal agencies, non-Federal parties, and several key interagency planning teams such as the Chief Financial Officers Council, and the Federal Accounting Standards Advisory Board, maintains financial management policies for the Federal Government. (OMB)Research Department - Federal Reserve Bank of Philadelphia (FRBP)The late columnist Joseph Livingston started the Livingston Survey in 1946. It is the oldest continuous survey of economists' expectations. It summarizes the forecasts of economists from industry, government, banking, and academia. The Federal Reserve Bank of Philadelphia took responsibility for the survey in 1990. The...

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