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Do forecasters really care about consensus?

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  • Goldstein, Nathan
  • Zilberfarb, Ben-Zion

Abstract

The way expectations are formed is a crucial economic issue, far from being resolved. Strategic response of forecasters to the consensus belief can explain key features of expectations formation documented in survey data. However, empirical evidence for such a response could be criticized on the basis of the underlying informational assumptions. This study exploits a special design, in an Israeli survey of firm-level inflation forecasts, which controls the information about consensus reported to the participants. We find a significant tendency of anti-herding, which is also related to the inflation level. As the inflation rate decreases, the tendency to anti-herd diminishes. This may suggest that a greater attention to inflation is associated with over-response to consensus.

Suggested Citation

  • Goldstein, Nathan & Zilberfarb, Ben-Zion, 2021. "Do forecasters really care about consensus?," Economic Modelling, Elsevier, vol. 100(C).
    • Handle: RePEc:eee:ecmode:v:100:y:2021:i:c:s0264999321001127
    DOI: 10.1016/j.econmod.2021.105523
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    More about this item

    Keywords

    Survey forecasts; Anti-herding; Information rigidities; Inflation;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications

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