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Herding Behavior of Business Cycle Forecasters in Times of Economic Crises

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  • Jan-Christoph Rülke
  • Maria Silgoner
  • Julia Wörz

Abstract

Using a large international data set we analyze whether business cycle forecasters tend to herd or anti-herd. Applying different measures of economic crises, we distinguish between normal economic circumstances and times of crises. We find evidence for anti-herding behavior for most industrial economies, i.e. forecasters deliberately stick out their neck with extreme forecasts for strategic reasons. For a set of emerging market economies, by contrast, we find evidence for herding behavior. We relate this finding to the high incidence of economic and financial crises in these countries. A test for herding behavior during economic crises confirms that forecasters tend to herd in times of high forecast uncertainty.

Suggested Citation

  • Jan-Christoph Rülke & Maria Silgoner & Julia Wörz, 2012. "Herding Behavior of Business Cycle Forecasters in Times of Economic Crises," WHU Working Paper Series - Economics Group 12-03, WHU - Otto Beisheim School of Management.
    • Handle: RePEc:whu:wpaper:12-03
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    References listed on IDEAS

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    More about this item

    Keywords

    Business Cycle; Forecasting; Economic Crises; (Anti-)Herding;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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