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Information Rigidities in Economic Growth Forecasts: Evidence from a Large International Panel

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  • Dovern, Jonas
  • Fritsche, Ulrich
  • Loungani, Prakash
  • Tamirisa, Natalia

Abstract

We examine the behavior of forecasts for real GDP growth using a large panel of individual forecasts from 30 advanced and emerging economies during 1989-2010. Our main findings are as follows. First, our evidence does not support the validity of the sticky information model (Mankiw and Reis, 2002) for describing the dynamics of professional growth forecasts. Instead, the empirical evidence is more in line with implications of "noisy" information models (Woodford, 2002; Sims, 2003). Second, we find that information rigidities are more pronounced in emerging economies than advanced economies. Third, there is evidence of nonlinearities in forecast smoothing. It is less pronounced in the tails of the distribution of individual forecast revisions than in the central part of the distribution. --

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Paper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 79936.

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Date of creation: 2013
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Handle: RePEc:zbw:vfsc13:79936

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Keywords: forecast; economic; information; expectations;

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  1. Jörg Döpke & Jonas Dovern & Ulrich Fritsche & Jiri Slacalek, 2008. "Sticky Information Phillips Curves: European Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(7), pages 1513-1520, October.
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Cited by:
  1. Dovern, Jonas, 2013. "When are GDP forecasts updated? Evidence from a large international panel," Economics Letters, Elsevier, vol. 120(3), pages 521-524.

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