The green line is the density implied by these probabilities, assuming a uniform distribution within each bin, and assuming that the end bins are truncated (since this is the policy rate, truncation of the lower open bin is quite natural; less so for the higher open bin, but very little probability is placed there by the average distribution). For visual reasons, the density forecast is plotted by connecting the mid-points of each bin. The mean is that implied by this density forecast. 45  In addition, even if participants were reporting the mode of the marginal distribution, the mode of the average distribution does not necessarily match the average of the modes, as is well understood. Of course, there is always the possibility that participants may not provide consistent answers when asked about the modal forecast and the entire distribution. 12  BIS central bankers’ speeches  because we thought this was a more effective approach to elicit unconditional distributions, and because we were interested in the scenario probabilities. Note that from January to March the survey question did not change, but we added an explicit “negative rate” bin. In addition to eliciting density forecasts conditional on various scenarios, the surveys have sometimes asked for jointprobability distributions for different variables. This is helpful in assessing how market participants expect the FOMC to respond to various economic scenarios.
122 (www.cesifogroup.de); Gouveia, S. and Correia, L. (***):Some facts about business cycles synchronisation across the euro area countries: the case of small countries, Centre for Transdisciplinary Development Studies (CETRAD), Department of Economics, Sociology and Management (DESG), University of Trás-os-Montes and Alto Douro (UTAD), Portugal. 2  BIS central bankers’ speeches  brought cycles together, although a few efficient and credible shock absorbers were devised at the eve of the euro. Further on, there is some evidence on the increasing correlation between real cycles and financial cycles across different groups of EU member states, as provided by Meller and Metiu (2015) 5. Such a pattern emerges regardless of different sources and well-documented differences in frequencies and amplitudes between real and financial cycles. Moreover, researchers from the Bank for International Settlements have shown that the correlation between real and financial cycles gets stronger over time as the duration and amplitude of financial cycles increases. The main explanation for the increasing correlation between the real and financial cycle is the so-called “unfinished recession” phenomenon, according to which globalization and a more activist monetary policy, which fails to take into account the state of the financial cycle, eventually cause a bigger recession down the road 6. We are left with two more interesting features of cyclical (co)movements. The degree to which real and financial cycles converge across groups of member states is neither constant, nor does it increase in linear fashion over time. All the previously described processes might deliver the periods of high synchronisation, followed by rapidly collapsing convergence.