Do private sector forecasters desire to deviate from the german council of economic experts?

  • In this paper, we contrast more than 6,000 private sector forecasts to projections of the German council of economic experts (Sachverständigenrat). Although the forecasts are submitted simultaneously, we find that the council's real economy forecasts, i.e. their growth, unemployment and fiscal forecasts have a higher forecast accuracy compared to the private sector forecasts. We also document that private sector forecasters deliberately place their real economy forecasts away from the council's projection. This strategic forecasting behavior explains why the private sector performs worse than the council. This result is robust over time but splitting the private sector in different groups reveals that the forecasts of banks compared to research institutes deviate more from the council's forecast.

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Metadaten
Author:Jan-Christoph Rülke
URN:urn:nbn:de:hbz:992-opus4-4203
Series (Serial Number):WHU – Working Paper Series in Economics (WP 11/04)
Publisher:WHU – Otto Beisheim School of Management
Place of publication:Vallendar
Document Type:Working Paper
Language:English
Date of Publication (online):2017/06/15
Publishing Institution:WHU - Otto Beisheim School of Management
Release Date:2017/06/15
Tag:Herdentrieb; Privatwirtschaftliche Prognostiker; Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung
German Council of Economic Experts; Herding; Private sector forecasters
Volume:2011
Issue:WP 11/04
Page Number:20
Institutes:WHU Economics Group / Chair of Monetary Economics
JEL-Classification:C Mathematical and Quantitative Methods / C3 Multiple or Simultaneous Equation Models / C33 Models with Panel Data
D Microeconomics / D8 Information, Knowledge, and Uncertainty / D84 Expectations; Speculations
E Macroeconomics and Monetary Economics / E3 Prices, Business Fluctuations, and Cycles / E37 Forecasting and Simulation
Licence (German):Copyright for this publication