What are the costs of an inaccurate forecast? How can forecasters do better? The latest WSJ Online Econoblog is about The Perils of Forecasting, featuring bloggers James Hamilton of Econbrowser and Kash Mansori of Angry Bear. They end up more or less on the same page.
Both for purposes of making forecasts, as well as for basing policy on them, I think our strongest asset is to maintain a fair degree of humility about our ability to predict what's coming next. ...So here's my zen: Don't ask for too much of your forecast or your policy, and it won't disappoint you.
..my concluding wish would be the same as yours: that policy makers, be they at the Fed, Congress, the White House, or anywhere else, behave as if the future is extremely uncertain -- which it is. ...A more explicit acknowledgement that even the best forecasts are only very, very rough guesses might help to reduce violations of the "Economic Hippocratic Oath": First, do no harm.