Information Problems for Policy Analysis and Forecasting

Good information is required for policy analysis and forecasting. This paper reviews the broad range of information problems that face an analyst or forecaster. Two distinct situations are considered: (1) the need to explain the current structure of an economic sector, and (2) the requirement to predict the effects of structural changes. The difficulties considered include data revisions, conflicting results in published studies, publication biases and possibly inappropriate models and theories. Examples considered include computable general equilibrium analyses and forecasts of the effects of airline deregulation.