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Strategic bias, herding behaviour and economic forecasts

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  • Jordi Pons-Novell

    (University of Barcelona, Spain)

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    Abstract

    Professional forecasters can have other objectives as well as minimizing expected squared forecast errors. This paper studies whether the people or companies which make forecasts behave strategically with the aim of maximizing aspects such as publicity, salary or their prestige, or more generally to minimize some loss function; or whether, on the contrary, they make forecasts which resemble consensus forecasts (herding behaviour). This study also analyses whether, as forecasters gain more reputation and experience, they make more radical forecasts, that is, they deviate further from the consensus. For this the Livingston Survey is used, a panel of experts who make forecasts on the future evolution of the United States economy. Copyright © 2003 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/for.860
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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Journal of Forecasting.

    Volume (Year): 22 (2003)
    Issue (Month): 1 ()
    Pages: 67-77

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    Handle: RePEc:jof:jforec:v:22:y:2003:i:1:p:67-77

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/2966

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    Cited by:
    1. Batchelor, Roy, 2007. "Bias in macroeconomic forecasts," International Journal of Forecasting, Elsevier, vol. 23(2), pages 189-203.
    2. Tillmann, Peter, 2011. "Strategic forecasting on the FOMC," European Journal of Political Economy, Elsevier, vol. 27(3), pages 547-553, September.
    3. Stekler, H.O., 2007. "The future of macroeconomic forecasting: Understanding the forecasting process," International Journal of Forecasting, Elsevier, vol. 23(2), pages 237-248.
    4. Stephan Danninger & Irina Tytell & Ravi Balakrishnan & Selim Elekdag, 2009. "The Transmission of Financial Stress From Advanced to Emerging Economies," IMF Working Papers 09/133, International Monetary Fund.
    5. Pierdzioch, Christian & Rülke, Jan-Christoph, 2012. "Forecasting stock prices: Do forecasters herd?," Economics Letters, Elsevier, vol. 116(3), pages 326-329.
    6. Schanne, Norbert, 2012. "The formation of experts' expectations on labour markets : do they run with the pack?," IAB Discussion Paper 201225, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    7. Pfajfar, Damjan & Santoro, Emiliano, 2010. "Heterogeneity, learning and information stickiness in inflation expectations," Journal of Economic Behavior & Organization, Elsevier, vol. 75(3), pages 426-444, September.
    8. Dovern, Jonas, 2013. "When are GDP forecasts updated? Evidence from a large international panel," Economics Letters, Elsevier, vol. 120(3), pages 521-524.
    9. Tito Nícias Teixeira da Silva Filho, 2013. "Banks, Asset Management or Consultancies' Inflation Forecasts: is there a better forecaster out there?," Working Papers Series 310, Central Bank of Brazil, Research Department.

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