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Inattentive Professional Forecasters

Author

Listed:
  • Hervé Le Bihan

    (Banque de France)

  • Philippe Andrade

    (Banque de France)

Abstract

Using the ECB Survey of Professional Forecasters we find evidence that those forecasters draw systematically biased predictions and disagree even if they forecast the same variable. Recent theoretical advances in the macroeconomics of imperfect information relate these bias and disagreement to theories of inattention. We provide a micro data estimation of the extent of inattention among professional forecasters. We show that, on our sample, about 20% of professional forecasters are inattentive to new information released each quarter. However, a formal test reveals that this observed inattention cannot generate the extent of systematic forecasting errors and disagreement among forecasters characterizing the data. There is more stickiness in expectations than the one the mere inattention is able to generate.

Suggested Citation

  • Hervé Le Bihan & Philippe Andrade, 2010. "Inattentive Professional Forecasters," 2010 Meeting Papers 1144, Society for Economic Dynamics.
  • Handle: RePEc:red:sed010:1144
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    References listed on IDEAS

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    JEL classification:

    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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