Central banks need to avoid ‘overconfidence’, says RBA’s Hauser
Deputy governor warns against 'false prophets' when forecasting with point estimates
Relying too much on point estimates could lead to overconfidence when conducting forecasts, according to the deputy governor of the Reserve Bank of Australia (RBA).
Speaking to the Economic Society of Australia at Queensland University of Technology on August 12, Andrew Hauser said most models used for economic analysis were based on historical relationships between individual variables. If central bankers ran forecasts based on such data, he said, they risked becoming overconfident.
“Such model
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