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Information Rigidities; Comparing Average and Individual Forecasts for a Large International Panel

Listed author(s):
  • Jonas Dovern
  • Ulrich Fritsche
  • Prakash Loungani
  • Natalia T. Tamirisa

We study forecasts for real GDP growth using a large panel of individual forecasts from 36 advanced and emerging economies during 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 more in line “noisy” information models (Woodford, 2002; Sims, 2003) than with the assumptions of the sticky information model (Mankiw and Reis, 2002). While there are cross-country variations in information rigidity, there is no systematic difference between advanced and emerging economies.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 14/31.

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Length: 24
Date of creation: 12 Feb 2014
Handle: RePEc:imf:imfwpa:14/31
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