meanwhile back on the farm, due to the consequences of the most elementary flaw of our Debt based system not being recognized and addressed, the ratio of wolves to sheep steadily increases day by day in a rich land.

DSC 08.

Hi, I realise that the consensus was too pessimistic, however I thought we said something in our last forecast round about Treasury forecasting consistently below the consensus – or maybe that was just consistently below our forecasts 🙂

“I suspect that most forecasting models, unless they’re reviewed constantly, will have a tendency to produce periods of forecasts where the errors all in the same direction.”

I think your reasoning is right, after all most forecasting relies on some form of mean reversion, and when the mean is only occasionally revisited we are bound to end up with some form of consistent bias between times.

“As to the first, I don’t know what the long-term performance of the government forecasts are like, it is supposedly an independent body I believe.”

True, but my interest lies with what different factors have caused this implicit bias in forecasts. Both the US and NZ have huge current account deficits, and experienced a significant housing bubble over this time – what underlying assumptions have lead to one body over-estimating growth while the other under-estimates growth?

As to the first, I don’t know what the long-term performance of the government forecasts are like, it is supposedly an independent body I believe.

I suspect that most forecasting models, unless they’re reviewed constantly, will have a tendency to produce periods of forecasts where the errors all in the same direction. Alternatively, most models to have a lot of subjective input, and that input might be persistently too optimistic or pessimistic.