Expert Comment: Why does the OBR keep making large forecasting errors?

Abstract:

When the UK Chancellor sets tax and spending plans, they hinge on forecasts produced by the Office for Budget Responsibility (OBR). But what happens when those forecasts are systematically wrong? Professor Jennifer Castle, Sir David Hendry, and Dr Andrew Martinez, specialists in forecasting theory and practice at the Climate Econometrics programme, Nuffield College, University of Oxford, explain why the OBR’s 1970s-built forecasting model needs an overhaul.