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Inattentive Professional Forecasters

  • Hervé Le Bihan

    (Banque de France)

  • Philippe Andrade

    (Banque de France)

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.

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Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 1144.

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Date of creation: 2010
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Handle: RePEc:red:sed010:1144
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