Inefficient use of competitors' forecasts?

Arbeitspapier

This paper assesses to what extent forecasters make effcient use of competitors' forecasts. Usinga panel of forecasters, I find that forecasters underuse information from their competitors in their forecasts for current and next year's annual GDP growth and inflation. The results also show that forecasters increase the attention to their competitors as the forecast horizon decreases. In a model of noisy information with fixed target forecasts, I confirm the empirical results of underuse of competitors' information. I also extend the model to include a revision cost and show how this can explain the observed ineffciency and observed horizon dynamics. Using the same model framework, I also rule out overconfidence as the main explanation of the observed behavior.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 2019:9

Classification and Topics

• Classification: Wirtschaft ; Forecasting Models; Simulation Methods ; Asymmetric and Private Information; Mechanism Design ; General Aggregative Models: Forecasting and Simulation: Models and Applications ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications
• Subject: Forecast Behavior ; Efficiency ; Revision Cost ; Forecast Smoothing ; Overconfidence

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Reslow, André
• Event: Veröffentlichung
• (who): Uppsala University, Department of Economics
• (where): Uppsala
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/224113
• URN: urn:nbn:se:uu:diva-395740
• Last update: 10.03.2025, 11:44 AM CET