Monetary Policy and Forecasts for Real GDP Growth: An Empirical Investigation for the Federal Republic of Germany

✍ Scribed by Gebhardt Kirschgässner; Marcel Savioz

• Book ID: 108561035
• Publisher: John Wiley and Sons
• Year: 2001
• Tongue: English
• Weight: 204 KB
• Volume: 2
• Category: Article
• ISSN: 1465-6485
• DOI: 10.1111/1468-0475.00044

✦ Synopsis

Abstract

Using quarterly data for the Federal Republic of Germany, we generate four-quarter-ahead forecasts for real GDP growth. Throughout the 1970s and 1980s, other monetary indicators like real M1 or short-run interest rates clearly outperform forecasts which are based on interest rate spreads. This holds for within as well as for ex-post predictions. The same holds for the development after 1992. Moreover, it is shown that simple forecasts based on M1 or on short-run interest rates outperform the common biannual GNP forecasts of the group of German economic research institutes.