The primary purpose of the paper is to answer the following two questions regarding the
performance of the influential Federal Open Market Committee (FOMC) of the Federal
Reserve System, in comparison with the forecasts contained in the "Greenbooks" of the
professional staff of the Board of Governors: Does the FOMC have expertise, and can it
forecast better than the staff? The FOMC forecasts that are analyzed in practice are nonreplicable
forecasts. In order to evaluate such forecasts, this paper develops a model to
generate replicable FOMC forecasts, and compares the staff forecasts, non-replicable
FOMC forecasts, and replicable FOMC forecasts, considers optimal forecasts and
efficient estimation methods, and presents a direct test of FOMC expertise on nonreplicable
FOMC forecasts. The empirical analysis of Romer and Romer (2008) is reexamined
to evaluate whether their criticisms of the FOMC's forecasting performance
should be accepted unreservedly, or might be open to alternative interpretations.
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