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Explanations of the inconsistencies in survey respondents'forecasts

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  • Clements, Michael P.

    (Department of Economics,University of Warwick)

Abstract

A comparison of the point forecasts and the central tendencies of probability distributions of inflation and output growth of the SPF indicates that the point forecasts are sometimes optimistic relative to the probability distributions. We consider and evaluate a number of possible explanations for this finding, including the degree of uncertainty concerning the future, computational costs, delayed updating, and asymmetric loss. We also consider the relative accuracy of the two sets of forecasts.

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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 870.

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Length: 36 pages
Date of creation: 2008
Date of revision:
Handle: RePEc:wrk:warwec:870

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Keywords: Rationality ; point forecasts ; probability distributions;

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Citations

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Cited by:
  1. Clements, Michael P., 2012. "Do professional forecasters pay attention to data releases?," International Journal of Forecasting, Elsevier, Elsevier, vol. 28(2), pages 297-308.
  2. Clements, Michael P, 2012. "Subjective and Ex Post Forecast Uncertainty : US Inflation and Output Growth," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 995, University of Warwick, Department of Economics.
  3. Clements, Michael P., 2008. "Rounding of probability forecasts : The SPF forecast probabilities of negative output growth," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 869, University of Warwick, Department of Economics.
  4. Lui, Silvia & Mitchell, James & Weale, Martin, 2011. "The utility of expectational data: Firm-level evidence using matched qualitative-quantitative UK surveys," International Journal of Forecasting, Elsevier, Elsevier, vol. 27(4), pages 1128-1146, October.
  5. Michael P. Clements, 2014. "US Inflation Expectations and Heterogeneous Loss Functions, 1968–2010," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 33(1), pages 1-14, 01.
  6. Paloviita, Maritta & Viren, Matti, 2014. "Analysis of forecast errors in micro-level survey data," Research Discussion Papers, Bank of Finland 8/2014, Bank of Finland.
  7. Clements, Michael P, 2012. "Probability Distributions or Point Predictions? Survey Forecasts of US Output Growth and Inflation," The Warwick Economics Research Paper Series (TWERPS), University of Warwick, Department of Economics 976, University of Warwick, Department of Economics.
  8. Deschamps, Bruno & Ioannidis, Christos, 2013. "Can rational stubbornness explain forecast biases?," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 92(C), pages 141-151.
  9. Wieland, Volker & Wolters, Maik H, 2010. "The Diversity of Forecasts from Macroeconomic Models of the U.S. Economy," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7870, C.E.P.R. Discussion Papers.

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