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Do Private Sector Forecasters Desire to Deviate From the German Council of Economic Experts?

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  • Jan-Christoph Ruelke

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    (WHU Vallendar)

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    Abstract

    In this paper, we contrast more than 6,000 private sector forecasts to projections of the German Council of Economic Experts (Sachverstaendigenrat). Although the forecasts are submitted simultaneously, we find that the Council’s real economy forecasts, i. e. their growth, unemployment and fiscal forecasts have a higher forecast accuracy compared to the private sector forecasts. We also document that private sector forecasters deliberately place their real economy forecasts away from the Council’s projection. This strategic forecasting behavior explains why the private sector performs worse than the Council. Splitting the private sector in different groups reveals that the forecasts of banks compared to research institutes deviate more from the Council’s forecast.

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    Bibliographic Info

    Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.

    Volume (Year): 232 (2012)
    Issue (Month): 4 (July)
    Pages: 414-428

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    Handle: RePEc:jns:jbstat:v:232:y:2012:i:4:p:414-428

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    Related research

    Keywords: Private sector forecasters; herding; German Council of Economic Experts;

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    References

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