Are Forecasters Reluctant to Revise Their Predictions? Some German Evidence
Journal
Journal of Forecasting
ISSN
0277-6693
ISSN-Digital
1099-131X
Type
journal article
Date Issued
2006-09-05
Author(s)
Abstract
People are reluctant to admit mistakes. This could also be true of economic forecasters. If revisions of past forecasts are costly, then it will become optimal for forecasters to only partially adjust a past forecast in the light of new information. The unwillingness to admit to the mistake in the old forecast generates a bias of the new forecast in the direction of the old forecast. We test this hypothesis for the joint predictions of the Association of German Economic Research Institutes over the last 35 years. We find some evidence for such a bias and compute the implied unwillingness to revise forecasts.
Language
English
Keywords
forecast rationality
forecast revisions
adjustment cost
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Wiley
Publisher place
Chichester
Volume
25
Number
6
Start page
401
End page
413
Pages
13
Subject(s)
Eprints ID
31854