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News And Information Rigidity: Further Evidence From Gdp Growth Forecasts

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  • FAZLUL MIAH

    (Department of Accounting and Finance, KFUPM Business School, King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia)

Abstract

The study investigates the existence and the extent of information rigidity in gross domestic product (GDP) growth forecasts among 25 developed and 18 developing economies during 2002–2017 period utilizing a survey dataset never explored before on this issue. In general, the study finds ample evidence of information rigidity. However, it is not as common and as severe as it is in earlier studies. Our study also finds ample evidence of overreaction to new information. Information rigidity is present during the recession period for the developed countries, and we find some evidence of information gathering picking up during the recession period. Overall, we notice less forecast rigidity or inefficiency in our study compared to some earlier studies. Our multi-country test results show that forecast revisions depend on both own country and cross-country lagged revisions. In general, forecast revisions of developed economies, especially USA, prompt revisions in other developed and developing economies. Similarly, some developing countries’ forecast revisions prompt revisions in other developed and developing countries although at smaller magnitudes. Therefore, we confirm from earlier studies that one source of forecast rigidity is not to incorporate overseas events in forecast revisions quickly and completely.

Suggested Citation

  • Fazlul Miah, 2023. "News And Information Rigidity: Further Evidence From Gdp Growth Forecasts," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 23(01n04), pages 1-21, December.
  • Handle: RePEc:wsi:gejxxx:v:23:y:2023:i:01n04:n:s2194565924500039
    DOI: 10.1142/S2194565924500039
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    Keywords

    Information rigidity; forecast efficiency; GDP forecasts; cross-country forecasts;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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