Do professional forecasters apply the Phillips curve and Okun's law? Evidence from six Asian-Pacific countries

Using survey data from six Asian-Pacific countries, we report that professional forecasters apply the wage Phillips curve, the price Phillips curve, and Okun's law when forecasting macroeconomic variables. This result is robust when using time-varying coefficients, different forecast horizons and when taking business-cycle asymmetries into account. The results also suggest that the confidence in macroeconomic relationships was more pronounced during the economic crisis 2007-2009 and when looking at longer forecast horizons.

► Is the first study which shows that professional forecasters in Asian-Pacific countries apply the Phillips curve and Okun's law. ► Serves as a building block for modeling the expectation formation process. ► Reports a number of robustness test including time-varying coefficients, different forecast horizons and business-cycle asymmetries. ► Shows that the confidence in macroeconomic relationships was more pronounced during the economic crisis 2007-2009. ► Has interesting policy implications as central bank's should be aware that forecasters understand macroeconomic relationships.