Using Consensus Modeling to Formulate a More Accurate Economic Forecast

Open Access
Dau, Nicholas Michael
Area of Honors:
Bachelor of Science
Document Type:
Thesis Supervisors:
  • Andres Aradillas Lopez, Thesis Supervisor
  • Russell Paul Chuderewicz, Honors Advisor
  • forecasting
  • economics
  • GDP
  • CPI
  • inflation
  • interest rates
  • consensus
This paper looks to forecast GDP growth, CPI change and 10-Year Treasury note interest rates through a consensus forecasting model. The consensus model takes into account 50-60 forecasts available from the Blue Chip Economic Indicators survey. The model differs from mainstream forecasts in that it assigns probabilities for each economic outcome, and supplements this with a broad 99% confidence interval. Ultimately the model performs best for current year CPI change and GDP growth to a lesser degree. The model struggles to provide precise and accurate forecasts for the long-term GDP, CPI and interest rate forecasts.