Discussion Paper Details

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Title: Forecasting Unemployment across Countries: the Ins and Outs

Author(s): Régis Barnichon and Paula Garda

Publication Date: November 2015

Keyword(s): steady-state unemployment and stock-flow model

Programme Area(s): Labour Economics and Monetary Economics and Fluctuations

Abstract: This paper evaluates the flow approach to unemployment forecasting proposed by Barnichon and Nekarda (2012) for a set of OECD countries characterized by very different labor markets. We find that the flow approach yields substantial improvements in forecast accuracy over professional forecasts for all countries, with especially large improvements at longer horizons (one-year ahead forecasts) for European countries. Moreover, the flow approach has the highest predictive ability during recessions and turning points, when unemployment forecasts are most valuable.

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Bibliographic Reference

Barnichon, R and Garda, P. 2015. 'Forecasting Unemployment across Countries: the Ins and Outs'. London, Centre for Economic Policy Research.