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Conference Paper
Asia-phoria meet regression to the mean
There are two common failures in economic forecasting. One is excessive extrapolation of the (recent) past into the (distant) future, particularly susceptibility to ?irrational exuberance? (Schiller). The second is excessive subjective certainty that relies on confidence in continuity and hence consistently under predicts discontinuities?even relative to their known past probabilities. While the more bullish attitudes towards growth in China and India have been softening, the official forecasts in the IMF World Economic Outlook and the general discussions about the future of the global ...