EVALUATING MACROECONOMIC FORECASTS: A CONCISE REVIEW OF SOME RECENT DEVELOPMENTS

Macroeconomic forecasts are frequently produced, widely published, intensively discussed, and comprehensively used. The formal evaluation of such forecasts has a long research history. Recently, a new angle to the evaluation of forecasts has been addressed, and in this review we analyze some recent developments from that perspective. The literature on forecast evaluation predominantly assumes that macroeconomic forecasts are generated from econometric models. In practice, however, most macroeconomic forecasts, such as those from the IMF, World Bank, OECD, Federal Reserve Board, Federal Open Market Committee (FOMC), and the ECB, are typically based on econometric model forecasts jointly with human intuition. This seemingly inevitable combination renders most of these forecasts biased and, as such, their evaluation becomes nonstandard. In this review, we consider the evaluation of two forecasts in which: (i) the two forecasts are generated from two distinct econometric models; (ii) one forecast is generated from an econometric model and the other is obtained as a combination of a model and intuition; and (iii) the two forecasts are generated from two distinct (but unknown) combinations of different models and intuition. It is shown that alternative tools are needed to compare and evaluate the forecasts in each of these three situations. These alternative techniques are illustrated by comparing the forecasts from the (econometric) Staff of the Federal Reserve Board and the FOMC on inflation, unemployment, and real GDP growth. It is shown that the FOMC does not forecast significantly better than the Staff, and that the intuition of the FOMC does not add significantly in forecasting the actual values of the economic fundamentals. This would seem to belie the purported expertise of the FOMC.     

WHO SHOULD REGULATE FINANCIAL INSTITUTIONS?

Financial market transactions involve complex decisions and significant amounts of information have to be processed by consumers. Economists often call for statutory regulation to overcome so-called 'information asymmetries.' However, the market will generally develop sophisticated institutions that are able to deal with such problems in financial markets. It is important that regulators do not impede the development of such institutions. The liberal market structure may not look like the market structures in many textbook models of so-called 'perfect' markets. However, the structure may well be efficient and welfare enhancing.     

The Strategy/Structure Debate: An Examination of the Performance Implications

The relative importance of strategy and structure lies at the heart of the strategic management field, yet little is known about the associated performance implications of such changes. The purpose of this study was to investigate the financial performance impact of strategy and structure changes. We conducted an examination of 259 firms over a 36-year period using a quasi-experimental design. No significant change–performance relationships were found for tandem changes (i.e. when both strategy and structure were changed). But, we found that singular structure changes were associated with the highest performance. This finding was consistent with the theory: though strategy is important, proper deployment of firm uniqueness is paramount to performance enhancement.     

Citizenship behavior and fairness in organizations: Issues and directions for future research

In this review, we discuss the preceding papers in the special issue, and explore their implications for future research. In particular, the effects of fairness on citizenship behaviors are summarized, the role of managerial responses to OCBs on subsequent perceptions of fairness are explored, and directions for future research are discussed.     

Ethical Consumers Among the Millennials: A Cross-National Study

Using two samples drawn from contrasting developed and developing countries, this investigation considers the powerful, unique Millennial consumer group and their engagement in ethical consumerism. Specifically, this study explores the levers that promote their ethical consumption and the potential impact of country of residence on cause-related purchase decisions. Three distinct subgroups of ethical consumers emerge among Millennials, providing insight into their concerns and behaviors. Instead of being conceptualized as a single niche market, Millennials should be treated as a collection of submarkets that differ in their levels of awareness of ethical issues, consider discrete motives when making consumption decisions, and are willing to engage in cause-related purchasing to varying degrees. These findings have several critical implications for theory and practice.