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Are professional forecasts of growth in US business investment rational?

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  • Baghestani, Hamid

Abstract

Utilizing comparable time-series forecasts as benchmarks, we document the “weak” and “stronger” rationality of professional forecasts of growth in business investment for 1982–2009. Consistent with these findings, the forecasts are directionally accurate and imply symmetric loss.

Suggested Citation

  • Baghestani, Hamid, 2012. "Are professional forecasts of growth in US business investment rational?," Economics Letters, Elsevier, vol. 114(1), pages 132-135.
    • Handle: RePEc:eee:ecolet:v:114:y:2012:i:1:p:132-135
    DOI: 10.1016/j.econlet.2011.09.013
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    References listed on IDEAS

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    1. Baghestani, Hamid, 1992. "On the Formation of Expected Inflation under Various Conditions: Some Survey Evidence," The Journal of Business, University of Chicago Press, vol. 65(2), pages 281-293, April.
    2. James H. Stock & Mark W.Watson, 2003. "Forecasting Output and Inflation: The Role of Asset Prices," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 788-829, September.
    3. Holden, K & Peel, D A, 1990. "On Testing for Unbiasedness and Efficiency of Forecasts," The Manchester School of Economic & Social Studies, University of Manchester, vol. 58(2), pages 120-127, June.
    4. Francis X. Diebold & Jose A. Lopez, 1995. "Forecast evaluation and combination," Research Paper 9525, Federal Reserve Bank of New York.
    5. Baghestani, Hamid, 2011. "Federal Reserve and private forecasts of growth in investment," Journal of Economics and Business, Elsevier, vol. 63(4), pages 290-305, July.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Österholm, Pär, 2013. "Forecasting Business Investment in the Short Term Using Survey Data," Working Papers 131, National Institute of Economic Research.
    2. João Valle e Azevedo & Inês Maria Gonçalves, 2015. "Macroeconomic Forecasting Starting from Survey Nowcasts," Working Papers w201502, Banco de Portugal, Economics and Research Department.

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    More about this item

    Keywords

    Consensus forecasts; Rationality; Directional accuracy; Symmetric loss;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

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