Do forecasters really care about consensus?

Nathan Goldstein, Ben Zion Zilberfarb

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

The way expectations are formed is a crucial economic issue, far from being resolved. Strategic response of forecasters to the consensus belief can explain key features of expectations formation documented in survey data. However, empirical evidence for such a response could be criticized on the basis of the underlying informational assumptions. This study exploits a special design, in an Israeli survey of firm-level inflation forecasts, which controls the information about consensus reported to the participants. We find a significant tendency of anti-herding, which is also related to the inflation level. As the inflation rate decreases, the tendency to anti-herd diminishes. This may suggest that a greater attention to inflation is associated with over-response to consensus.

Original languageEnglish
Article number105523
JournalEconomic Modelling
Volume100
DOIs
StatePublished - Jul 2021

Bibliographical note

Publisher Copyright:
© 2021 Elsevier B.V.

Keywords

  • Anti-herding
  • Inflation
  • Information rigidities
  • Survey forecasts

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