Fiscal Forecasts at the FOMC: Evidence from the Greenbooks | Zendy

Dean Croushore | Zendy; Simon van Norden | Zendy

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Fiscal Forecasts at the FOMC: Evidence from the Greenbooks

Author(s) -

Dean Croushore,

Simon van Norden

Publication year - 2017

Publication title -

the review of economics and statistics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 8.999

H-Index - 165

eISSN - 1530-9142

pISSN - 0034-6535

DOI - 10.1162/rest_a_00664

Subject(s) - romer , economics , fiscal policy , inflation (cosmology) , federal funds , output gap , monetary policy , monetary economics , unemployment , macroeconomics , physics , cartography , theoretical physics , geography

This paper examines fiscal policy forecasts prepared for the Federal Open Market Committee and its influence on U.S. monetary policy. The forecasts contain useful information beyond that in the CBO’s forecasts. Fiscal forecast errors are only weakly correlated with forecast errors for inflation and output growth, but those for the budget surplus are highly correlated with those for the unemployment rate and the output gap. Some fiscal variables can also account for a significant fraction of the “exogenous” changes in the federal funds rate target that Romer and Romer (2004) studied, consistent with the board’s statements on the importance of fiscal policy.

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