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

Listed author(s):
  • Rülke Jan-Christoph

    ()

    (Department of Economics,WHU – Otto Beisheim School of Management, Burgplatz 2, 56179 Vallendar, Germany)

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    In this paper, we contrast more than 6,000 private sector forecasts to projections of the German Council of Economic Experts (Sachverständigenrat). 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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    Article provided by De Gruyter in its journal Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik).

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

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