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

Jan-Christoph Rülke ()

No 11-04, WHU Working Paper Series - Economics Group from WHU - Otto Beisheim School of Management

Abstract: 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.

Keywords: Private Sector Forecasters; Herding; German Council of Economic Experts (search for similar items in EconPapers)
JEL-codes: C33 D84 E37 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2011-06
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Published Journal of Economics and Statistics, Volume 232, Issue 4 (Aug 2012)

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Persistent link: https://EconPapers.repec.org/RePEc:whu:wpaper:11-04

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