Those who can, do. Those who can't, teach. And those just plain incompetent, work as forecasters for the IMF - Off The News - economic forecasting at International Monetary Fund, Organization for Economic Cooperation and Development - Brief Article

International Economy, The, Nov-Dec, 2001

You see it often. Newspaper headlines around the world boldly declaring the latest IMF or OECD macroeconomic forecast. The Washington-based International Monetary Fund and the Paris-based Organization for Economic Cooperation and Development both enjoy huge budgets with which they deploy hundreds of macroeconomic specialists to measure growth and inflation through out the industrialized economies. "I'll be in Paris next week for the OECD meeting" is the typical hushed word from the latest new government economic official, suggesting that the macroeconomic secrets of the world will soon be in their grasp.

The only problem with this picture is that the economic predictions of both the IMF and OECD are among the worst in the entire economics profession. The central bank of Sweden recently studied fifty-two thousand forecasts made by 250 institutions between 1991 and 2000 for the United States, Japan, France. Germany, Italy, and Sweden. The forecasts of the IMF and OECD were included in the mix. The result: The IMF and OECD received a goose egg, with forecasts, in terms of their accuracy, coming in far below the average for the group. In the case of their measurements of certain economies, the IMF and OECD came in at the bottom of the list in terms of predictive success.

In general, most forecasters overestimated inflation and underestimated GDP for the period studied. Most failed to predict the non-inflationary boom of the second half of the 1990's as well as the current downturn.

But in the end, all is not lost. To their credit, both institutions, the IMF and the OECD, are doing their darned best to support the Paris hotel industry as well as to keep the first-class intercontinental flight sections of major airlines from feeling the full impact of the recent terrorist threat.