Consensus Forecasts and Inefficient Information Aggregation

WPIEA2010178 Image
Price:  $18.00

Author/Editor: Christopher W Crowe
Release Date: © July, 2010
ISBN : 978-1-45520-189-1
Stock #: WPIEA2010178
Stock Status: On back-order

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Consensus forecasts are inefficient, over-weighting older information already in the public domain at the expense of new private information, when individual forecasters have different information sets. Using a cross-country panel of growth forecasts and new methodological insights, this paper finds that: consensus forecasts are inefficient as predicted; this is not due to individual forecaster irrationality; forecasters appear unaware of this inefficiency; and a simple adjustment reduces forecast errors by 5 percent. Similar results are found using US nominal GDP forecasts. The paper also discusses the result’s implications for users of forecaster surveys and for the literature on information aggregation.

More publications in this series: Working Papers

More publications by: Christopher W Crowe