Economic Forecasts, Rationality, and the Processing of New Information over Time

Steve Swidler and David Ketcher

Journal of Money, Credit and Banking, 1990, vol. 22, issue 1, 65-76

Abstract: This study analyzes real GNP and inflation forecasts published in the Blue Chip Economic Indicators. The survey revises annual growth rate estimates every month, thus making it possible to analyze the value of new information and its contribution to the estimates' predictive power of the actual values. If information is used efficiently, updated forecasts should provide more accurate predictions. The empirical results suggest that the revised forecasts of real GNP growth and inflation incorporate new information in a rational manner. In addition, the most recent inflation forecasts are found to be unbiased estimates on the actual rate of inflation. Copyright 1990 by Ohio State University Press.

Date: 1990
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