A Comparison Of Forecast Performance Between Federal Reserve Staff Forecasts, Simple Reduced-Form Models, And A DSGE Model

This paper compares the forecasts of an estimated dynamic stochastic general equilibrium (DSGE) model with that of the Federal Reserve staff and reduced-form time-series models. The paper has three goals. First, much of the related literature has compared forecasts from DSGE models with simple reduced-form forecasting techniques: The comparison with Federal Reserve staff forecasts provides a potentially more stringent test, given that previous research has shown the Federal Reserve staff forecast to be of high-quality relative to alternative methods.