Predictability of complex systems

Abstract

The fact that the economy is a complex system explains some of the observations made in the previous part. Besides (i) yielding an argument from external effects which shows why macroeconomic forecasts generally fail, it gives rise to explanations of (ii) the more particular fact that directional forecasts do not perform any better than point forecasts, and (iii) the marginal role of macroeconomic theory for economic forecasting.