THE NATIONAL BANK OF ROMANIA INFLATION FORECASTS BASED ON ECONOMETRIC MODELS ARE MORE ACCURATE THAN THE TARGET INFLATION
THE NATIONAL BANK OF ROMANIA INFLATION FORECASTS BASED ON ECONOMETRIC MODELS ARE MORE ACCURATE THAN THE TARGET INFLATION

Summary/Abstract: The objective of this research is to show that National Bank of Romania follow the international pattern by providing inflation rate forecasts based on its own model better than the target inflation.Starting from quarterly values for the annual inflation, for 2012 the forecasts based on the institution macro-econometric models were more accurate than the annual target fixed for each quarter.The accuracy of inflation targets made for 2013 was evaluated in ex-ante variant, choosing as benchmark forecasts those provided by NBR and the na?ve ones.This study introduces as a novelty in literature some measures of accuracy and it proposes the evaluation of accuracy for uncertainty intervals using only the lower, respectively the upper limit of each forecast interval. Only with some exceptions the errors based on the inferior limit of uncertainty intervals proposed by NBR are smaller than those computed using the superior boundaries as point forecasts. In ex-ante variant, for 2013 the targets for this year and the NBR forecasts based on econometric models were chosen as possible realizations. If the targeted inflation is considered as the real value of inflation in the first two quarters of 2013 the upper limits of intervals are recommended to be chosen unlike the inferior boundaries for the third and the fourth quarters from 2013.This paper is an original research not only for assessing NBR forecasts accuracy, but also for the proposal of new methods of evaluating the accuracy for point forecasts and uncertainty intervals

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