Just as changes in atmospheric conditions affect weather forecasts, changes in monetary policy affect economic forecasts. When monetary policy shifts, forecasters change their predictions about growth and inflation. But does the economy change to the same extent that forecasts do? In this article, Laurence Ball and Dean Croushore examine forecasts from the Survey of Professional Forecasters to determine if forecasts and the economy respond in tandem or if there are significant differences.

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Copyright © 2001 Federal Reserve Bank of Philadelphia. This article first appeared in Business Review - Federal Reserve Bank of Philadelphia Q4 (October 2001): 9-16.

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