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Macroeconomic forecasts and microeconomic forecasters in the Survey of Professional Forecasters

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  • Tom Stark

Abstract

Do professional forecasters distort their reported forecasts in a way that compromises accuracy? New research in the theory of forecasting suggests such a possibility. In a recent paper, Owen Lamont finds that forecasters in the Business Week survey make more radical forecasts as they gain experience. In this paper, the authors uses forecasts from the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters to test the robustness of Lamont's results. The author's results contradict Lamont's. However, careful examination of a methodological difference in the two surveys suggests a more general theory of forecasting that accounts for both sets of results.

Suggested Citation

  • Tom Stark, 1997. "Macroeconomic forecasts and microeconomic forecasters in the Survey of Professional Forecasters," Working Papers 97-10, Federal Reserve Bank of Philadelphia.
    • Handle: RePEc:fip:fedpwp:97-10
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    File URL: https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/1997/wp97-10.pdf
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    References listed on IDEAS

    as
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    3. Lamont, Owen A., 2002. "Macroeconomic forecasts and microeconomic forecasters," Journal of Economic Behavior & Organization, Elsevier, vol. 48(3), pages 265-280, July.
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    7. Paul Bennett & In Sun Geoum & David S. Laster, 1997. "Rational bias in macroeconomic forecasts," Staff Reports 21, Federal Reserve Bank of New York.
    8. Tilman Ehrbeck & Robert Waldmann, 1996. "Why Are Professional Forecasters Biased? Agency versus Behavioral Explanations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(1), pages 21-40.
    9. Stephen K. McNees, 1989. "Why do forecasts differ?," New England Economic Review, Federal Reserve Bank of Boston, issue Jan, pages 42-54.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Batchelor, Roy, 2007. "Bias in macroeconomic forecasts," International Journal of Forecasting, Elsevier, vol. 23(2), pages 189-203.
    2. Ottaviani, Marco & Sorensen, Peter Norman, 2006. "The strategy of professional forecasting," Journal of Financial Economics, Elsevier, vol. 81(2), pages 441-466, August.
    3. Artūras Juodis & Simas Kučinskas, 2023. "Quantifying noise in survey expectations," Quantitative Economics, Econometric Society, vol. 14(2), pages 609-650, May.
    4. Roy Batchelor, 2007. "Forecaster Behaviour and Bias in Macroeconomic Forecasts," ifo Working Paper Series 39, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    5. Goldstein, Nathan & Zilberfarb, Ben-Zion, 2021. "Do forecasters really care about consensus?," Economic Modelling, Elsevier, vol. 100(C).
    6. Dean Croushore, 2010. "Philadelphia Fed forecasting surveys: their value for research," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 1-11.
    7. Frenkel, Michael & Mauch, Matthias & Rülke, Jan-Christoph, 2020. "Do forecasters of major exchange rates herd?," Economic Modelling, Elsevier, vol. 84(C), pages 214-221.
    8. Sergey Smirnov, 2011. "Those Unpredictable Recessions," HSE Working papers WP BRP 02/EC/2011, National Research University Higher School of Economics.
    9. Bizer, Kilian & Meub, Lukas & Proeger, Till & Spiwoks, Markus, 2014. "Strategic coordination in forecasting: An experimental study," University of Göttingen Working Papers in Economics 195, University of Goettingen, Department of Economics.
    10. Marinovic, Iván & Ottaviani, Marco & Sorensen, Peter, 2013. "Forecasters’ Objectives and Strategies," Handbook of Economic Forecasting, in: G. Elliott & C. Granger & A. Timmermann (ed.), Handbook of Economic Forecasting, edition 1, volume 2, chapter 0, pages 690-720, Elsevier.
    11. Scott Schuh, 2001. "An evaluation of recent macroeconomic forecast errors," New England Economic Review, Federal Reserve Bank of Boston, pages 35-56.

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