WHY ATTEMPTS AT PRECISION ON ECONOMIC VARIABLES CAN BE GOOD THINGS. Now I want to qualify my last post. The Federal Reserve Bank has a structure which acknowledges that judgments about the economy are difficult. The Fed’s decisions are made by people of wide experience (people like Paul Volcker and Janet Yellen) and people who are selected from different regional economies.
Using precise numbers is a way of focusing the discussions of these people. Philip Tetlock, as I explained here, uses techniques of aggregating forecasts in his book SUPERFORECASTING. Using numbers permits better use of the wisdom of crowds.
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