A Defence of the FOMC

Martin Ellison (University of Oxford)

March 1, 2010, 17:00–18:00


Room MF 323

Political Economy Seminar


We defend the forecasting performance of the FOMC from the recent criticism of Christina and David Romer (2008). Our argument is that the FOMC forecasts a worst-case scenario that it uses to design robust decisions that will work well enough despite possible misspecification of its model. Our interpretation of the FOMC as reporting forecasts designed to rationalise a robust decision rule can explain all the findings of Romer and Romer, including the pattern of differences between FOMC forecasts and forecasts published by the staff of the Federal Reserve System in the Greenbook. Keywords: forecasting, monetary policy, robustness

JEL codes

  • C53: Forecasting and Prediction Methods • Simulation Methods
  • E52: Monetary Policy
  • E58: Central Banks and Their Policies


Martin Ellison (University of Oxford), A Defence of the FOMC, Political Economy Seminar, Toulouse: TSE, March 1, 2010, 17:00–18:00, room MF 323.