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Professional Forecasts of Interest Rates and Exchange Rates: Evidence from the Wall Street Journal's Panel of Economists

  • Karlyn Mitchell


    (Department of Business Management, North Carolina State University)

  • Douglas K. Pearce


    (Department of Economics, North Carolina State University)

Recent work on expectations suggests that professional forecasters may have incentives that lead them to make more extreme forecasts than they would make were accuracy the only criterion. We use the interest rate and exchange rate forecasts from the Wall Street Journal?s panel of economists to investigate this issue. We examine the unbiasedness and forecast accuracy of individual forecasters, finding that several forecasters produce biased forecasts and most forecasters cannot out-predict a random walk model. Our tests show evidence of systematic heterogeneity across forecasters and are consistent with independent forecasters making more radical predictions than forecasters from financial institutions.

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Paper provided by North Carolina State University, Department of Economics in its series Working Paper Series with number 004.

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Length: 41 pages
Date of creation: Oct 2004
Date of revision:
Handle: RePEc:ncs:wpaper:004
Note: First draft 2004-10
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