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Biased Forecasts to Affect Voting Decisions? The Brexit Case

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  • Cipullo, Davide

    (Department of Economics)

  • Reslow, André

    (Department of Economics)

Abstract

This paper introduces macroeconomic forecasters as political agents and suggests that they use their forecasts to infuence voting outcomes. We develop a probabilistic voting model in which voters do not have complete information about the future states of the economy and have to rely on macroeconomic forecasters. The model predicts that it is optimal for forecasters with economic interest (stakes) and influence to publish biased forecasts prior to a referendum. We test our theory using high-frequency data at the forecaster level surrounding the Brexit referendum. The results show that forecasters with stakes and influence released much more pessimistic estimates for GDP growth in the following year than other forecasters. Actual GDP growth rate in 2017 shows that forecasters with stakes and influence were also more incorrect than other institutions and the propaganda bias explains up to 50 percent of their forecast error.

Suggested Citation

  • Cipullo, Davide & Reslow, André, 2019. "Biased Forecasts to Affect Voting Decisions? The Brexit Case," Working Paper Series 2019:4, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:2019_004
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    Cited by:

    1. Aristotelis Boukouras & Will Jennings & Lunzheng Li & Zacharias Maniadis, 2019. "Can Biased Polls Distort Electoral Results? Evidence From The Lab And The Field," Discussion Papers in Economics 19/06, Division of Economics, School of Business, University of Leicester.
    2. Reslow, André, 2019. "Inefficient Use of Competitors’ Forecasts?," Working Paper Series 2019:9, Uppsala University, Department of Economics.
    3. Reslow, André, 2019. "Inefficient Use of Competitors'Forecasts?," Working Paper Series 380, Sveriges Riksbank (Central Bank of Sweden).
    4. Aristotelis Boukouras & Will Jennings & Lunzheng Li & Zacharias Maniadis, 2019. "Can Biased Polls Distort Electoral Results? Evidence from the Lab and the Field," Levine's Working Paper Archive 786969000000001528, David K. Levine.
    5. Pawel Dlotko & Simon Rudkin & Wanling Qiu, 2019. "An Economic Topology of the Brexit vote," Papers 1909.03490, arXiv.org.
    6. Davide Cipullo & André Reslow, 2021. "Electoral Cycles in Macroeconomic Forecasts," CESifo Working Paper Series 9088, CESifo.

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    More about this item

    Keywords

    Brexit; Interest Groups; Forecasters Behavior; Voting;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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