Correlations between forecasts and outcomes for the different variables Annual rates of change 1,0  0,8  0,8  0,6  0,6  0,4  0,4  0,2  0,2  Per cent  1,0  0,0  0,0 1  2  3  4  5  6  7  8  -0,2 -0,4 -0,6 -0,8  -0,2  GDP Employed CPIX CPI GDP per employed  -1,0  -0,4 -0,6 -0,8 -1,0  Forecast horizon (quarterly)  Sources: Statistics Sweden and the Riksbank  BIS Review 138/2007  11  Figure 10. Mean error for forecasts, an annual rate Percentage points 0,80  0,80  0,60  0,60  0,40  0,40  0,20  0,20  0,00  0,00  -0,20  -0,20  -0,40  -0,40  -0,60  -0,60  -0,80  -0,80 0  1  2  3  4  GDP  Employment  CPIX  5 CPI  6  7  8  GDP/ empolyment  Forecast horizon (quarterly)  Sources: Statistics Sweden and the Riksbank  Figure 11. Ranking for GDP following year Per cent Note. The Y-axis shows how large a percentage of times analysts have been better than the percentage of analysts as illustrated in the X-axis. In order to see how large a proportion of times the Riksbank has been better than 50 per cent of other analysts, see 50 on the X-axis, then study the red column on the Y-axis.
6  See, for example, Galbraith, J. and G. Tkacz, “How far can we forecast? : Forecast content horizons for some important macroeconomic time series”, Department of Economics Working Paper 13 (2006), McGill University. BIS Review 138/2007  3  out forecasting memory with the time series models. We were better than the model up to one year ahead and we had a forecasting memory four quarters ahead. Forecasts for employment If we instead look at employment forecasts, we believed that employment would rise more in 2003 and 2004 than it actually did (Figure 2). Instead, productivity growth was repeatedly stronger than expected. But on the other hand, employment has been stronger than expected in our assessments over the past year. The forecasts we have made for employment growth are on the whole more accurate than those of the time series model and the forecasting memory stretches eight quarters ahead (Figure 6). If, on the other hand, we only look at developments over the past two years, the Riksbank has succeeded in forecasting employment about as well as the time series model. This means that we have not succeeded in adding any further information on top of what the simple model can capture. How is the relationship between employment forecasts and outcome? The correlation is almost 0.9 one year ahead and just over 0.4 two years ahead (see Figure 9). The correlation is stronger than for GDP and agrees with the picture we obtained when we compared the forecasts with the time series model.