Models Behaving Badly

Economic forecasting is necessarily imprecise: too many things happen for forecasters to be able to foresee all of them. But imprecision is one thing; the systematic overestimate of the economic recovery in Europe is quite another.

LONDON – “Why did no one see the crisis coming?” Queen Elizabeth II asked economists during a visit to the London School of Economics at the end of 2008. Four years later, the repeated failure of economic forecasters to predict the depth and duration of the slump would have elicited a similar question from the queen: Why the overestimate of recovery?

https://prosyn.org/5FTmZeO