The Federal Reserve published a study titled “Alternative Scenarios at the Federal Reserve from 1968 to 2020: Data, Interpretation, and Evaluation.” The research documents 1,265 alternative scenarios that Fed staff presented to the Federal Open Market Committee in publicly released materials between 1968 and 2020. Analysis shows that the number and sophistication of scenarios increased over time, with most scenarios outlining a range of outcomes around a baseline. The authors created a taxonomy of six categories—aggregate demand, aggregate supply, external risks, financial conditions, fiscal policy, and expectation shifts—and noted that staff qualitative risk assessments accompanied the scenarios. When the scenario forecasts were compared to actual outcomes, the most accurate ones tended to predict major macroeconomic developments, even if the exact magnitudes were off. The study highlights both the value and limits of scenario analysis for central‑bank risk management.
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