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Information rigidities: Comparing average and individual forecasts for a large international panel

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

Abstract

We study forecasts of real GDP growth using a large panel of individual forecasts from 36 advanced and emerging economies over the period 1989–2010. We show that the degree of information rigidity in average forecasts is substantially higher than that in individual forecasts. Individual-level forecasts are updated quite frequently, a behavior which is more in line “noisy” information models (Woodford, 2002; Sims, 2003) than with the assumptions of the sticky information model (Mankiw & Reis, 2002). While there are cross-country variations in information rigidity, there are no systematic differences between advanced and emerging economies.

Suggested Citation

  • Dovern, Jonas & Fritsche, Ulrich & Loungani, Prakash & Tamirisa, Natalia, 2015. "Information rigidities: Comparing average and individual forecasts for a large international panel," International Journal of Forecasting, Elsevier, vol. 31(1), pages 144-154.
  • Handle: RePEc:eee:intfor:v:31:y:2015:i:1:p:144-154
    DOI: 10.1016/j.ijforecast.2014.06.002
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    Keywords

    Rational inattention; Aggregation bias; Growth forecasts; Information rigidity; Forecast behavior;

    JEL classification:

    • 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

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