Monday, May 07, 2012

TIP FOR SWAN: The right way to present budget forecasts





They are called fan charts. They acknowledge increasing uncertainty over time.

Stephen Bartos at ACIL Tasman tells me the Bank of England introduced them in 1996, the UK Office of Budget Responsibility uses them too.

Our Reserve Bank is moving in that direction. It's latest collection of forecasts uses a very wide range of projections for the out years.





Underlying inflation "2 to 3 per cent", GDP growth "3 to 4 per cent".

Unhelpful, but helpfully realistic.

How about it Mr Swan?