Evolution and Biases of Economic Forecasting

Abstract

I Abstract In this work we offer an analysis of economic forecasting from two points of view: firstly, we analyze the historical interpretation of the time concept in ancient Egypt, Old Testament and ancient Greece; secondly, we assess the current state of economic forecasting accuracy, the empirical analysis being primarily based on the IMF data. We analyze the optimism bias presence in the IMF forecasts for the GDP growth rate and inflation rate, in a dataset of 30 selected countries, in the period between 2000 and 2010 years. We find the presence of optimism bias in both observed variables. Additionally, we evaluate the IMF forecasting performance of 15 developed versus 15 developing countries and find that on average the predictions for the developed countries are more accurate as compared to the developing countries.